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Credit scores keep dipping as mortgage and credit card delinquencies reveal. Companies also spread widely, which promise quick fixes or elimination of negative information in credit bureau files. The Federal Trade Commission (FTC) has two new legal settlements that are filed against firms that allegedly claimed to perform such actions for desperate indebted homeowners and buyers, and other clients with troubled credit reports.

According to the FTC, the companies allegedly propose an offer a “credit repair.” This condition would permanently erase bankruptcies, missed payments, tax liens and other damaging credit information. These firms have also guaranteed customers to have increased credit score to easily apply for mortgage loans after acquiring services from them. Some even tell the customers that their firm has inside connections with lending agencies and credit bureaus.

Successful Credit Service Corporation in Woodland Hills is one of these companies that needs to settle with FTC. The FTC reported one of the company’s online ads claimed, “We fix the credit 100% guaranteed whether it is a bankruptcy or a 30-day late. It does not matter how long or how big it is, anything that’s on there, we can remove.” The ads further said that they could perform such services due to “priceless relationships we have with every creditor, collection company, public records provider and credit bureaus. We deal directly with these institutions in order to eradicate the problem at the source.”

The FTC further said that consumers had to pay $3,000 to $4,000 upfront for the services. There are also reports that Successful Credit Service’s president Tracy Ballard participated in real estate investment seminars to horde clients. The FTC said, “The problem is that it is a violation of federal law for a credit repair organization to collect fees from consumers before fully performing the services promised. It is also a violation for anyone to claim to be able to remove derogatory information from credit bureau files if the information is accurate and current.”

What is much more problematic is that after the clients paid up, the firm did “little, if anything, to fulfill (its) promises.” The clients also had difficulty to either contact the account executive or get a refund. They were either “given a variety of excuses as to why the promised results have not been achieved” or “almost always denied” of their requests. The settlement with the firm included $8.3 million-judgment and prohibition from further credit repair practices. The collection of the judgment was suspended due to the firm and Ballard’s loss of financial budget. Both the company and Ballard admitted that they “charged or received money” even before any service is doled out.

The other settlement involved Rudolph Joseph Strobel and Leanna Ruth Harrison in Texas. They operated various credit repair companies, which fully functioned through Internet ads and national publications. One of the companies they had was Lee Harrison Credit Restoration. The FTC quoted one of the Lee Harrison’s ads, “Have you had bankruptcy? We will repair your credit so that this past event does not haunt your future. We clean up your report’s history and increase your score.” But once again, after the clients shelled out $1,150 as upfront service fee, they did not receive any credit improvement. Neither of the accused admitted the charges but agreed to pay the $2.5 judgment. It was also suspended due to their inability to pay.

FTC attorney Anne LeJeune leading for the Texas case said, “People need to be wary when someone offers them a quick fix on their credit problems. Why? Because fixes are not possible or legal if the negative information is correct.”

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