Credit report

Credit repair companies in the crosshairs: Bill would help regulate industry

CHICAGO — The multi-billion dollar credit repair industry is largely unregulated. However, WGN Investigates has found a local nonprofit that thinks that should change.

In Illinois, legislation is being drafted to address what some see as industry shortcomings. In exchange for an upfront payment and a recurring monthly fee, some companies promise to boost a person’s credit score. But that bump may not last, and customers keep paying.

“I would say [credit repair companies] market most aggressively in communities of color where there is a lack of trust in financial institutions and the credit system,” said Ricki Lowitz, co-CEO of Working Credit, a Chicago-based nonprofit.

Take Mary Joyce Nunn, for example. The West Side resident needed a car, but his credit rating was low. For some people, this can prevent them from getting housing and employment. In Nunn’s case, that meant she couldn’t get a loan to buy the car she needed. So she sought help from a local credit repair company.

In all, she paid the company more than $2,000. But she says her credit rating has barely moved. Lowitz says Nunn’s experience is not unique.

“I think sometimes we have to pay for the lessons but, man, that was an expensive lesson that I had to pay for,” Nunn said.

In Illinois, there has been a push to hold some credit repair companies accountable.

The Illinois attorney general’s office sued a company, for example, for allegedly charging “illegal upfront fees” and “misrepresenting the cost of its services.”

But Lowitz and other consumer advocates think more can be done.

His group is among those working to introduce legislation that would allow consumers to withhold payment from a credit repair company until it “provides evidence that an item has detached and stayed away”. [a person’s credit report] for six months.”

WGN Investigates contacted the credit repair company that Nunn hired. They declined to comment for this story.