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Minnesota Department of Commerce, BBB offer advice on Credit Repair

March 04, 2014

For Immediate Release

As part of National Consumer Protection Week, which takes place March 2 – 8, the Minnesota Department of Commerce and Better Business Bureau of Minnesota and North Dakota (BBB) are partnering to offer consumers advice on companies offering credit repair services.

In Minnesota, the Department of Commerce regulates two types of firms offering credit repair services: credit service organizations and debt management companies. These firms must offer you a contract describing their fees and services, and they must register with the Department of Commerce. Before signing a contract with any firm, always check to see that they are licensed by visiting the License Lookup Tool on the Commerce website.

Credit Service organizations offer education and personalized advice to consumers for a fee. They advertise that they can improve your credit rating or history, help you obtain credit, and offer credit advice or assistance. Debt management companies also charge a fee for helping over-extended consumers by developing a budget and receiving money from the consumer to re-pay creditors under a specific debt reduction plan.

“There are certainly firms and organizations that offer you help to get out of debt, but there are the few companies that seek to victimize the debt-ridden consumer,” said Commerce Commissioner Mike Rothman. “Be wary of any company that promises a quick and painless way out of debt – all with a cost of high upfront fees.”

The Credit Repair Organizations Act (CROA) makes it illegal for credit repair companies to misrepresent what they can do for you, and to charge you before they have performed their services. CROA is enforced by the Federal Trade Commission and requires credit repair companies to explain:

• your legal rights in a written contract that also details the services they will perform
• your three day right to cancel without any charge
• how long it will take to get results
• the total cost you will pay, and any guarantees.

If a credit repair company you hired does not live up to its promises, you can:

• bring legal action in federal court for your actual losses or for what you paid them, whichever is more
• seek punitive damages — money to punish the company for violating the law
• join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney's fees

Here are some things to consider before choosing a credit repair firm:

• Avoid offers of a quick debt reduction or debt settlement plan with high up-front fees (in the hundreds or thousands of dollars) – this should be a red flag that you are not working with a legitimate firm.
• Some fraudulent agencies will get away with using a non-profit status just to get collect your money. The scam artists are likely to send you a financial planning brochure as “education.” Legitimate agencies should be willing to sit down with you and discuss your spending habits and help you come up with a budget.
• Beware of unrealistic promises, such as erasing your debt for pennies on the dollar in a short in a short time span or promises to reverse a bad credit score. If it sounds too good to be true, it probably is.
• Work with a Minnesota licensee that has a local office with staff available to answer your questions
• Research the company at Check to see if the firm is a member of a major association, such as the National Foundation for Credit Counseling ( or the Association of Independent Credit Counseling Agencies ( where the member are nonprofit agencies using certified financial counselors that meet certain quality and ethical standards using certified financial counselors.

Though some credit repair companies may be able to assist certain customers, BBB and the Minnesota Department of Commerce echo the views of the FTC: “The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.”

“Running into credit issues usually doesn’t happen overnight, and the same goes for repairing your credit – despite what some firms might tell you,” said Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota.

We Can Help 
The Commerce Department’s Consumer Help Line can be reached by phone at 651-539-1600 or 1-800-657-3602. Questions or consumer complaints can also be directed by email to or by mail to Minnesota Department of Commerce, 85 7th Place East, Suite 500, Saint Paul, MN 55101.

The mission of the Better Business Bureau is to be the leader in building marketplace trust by promoting, through self-regulation, the highest standards of business ethics and conduct, and to instill confidence in responsible businesses through programs of education and action that inform, assist and protect the general public. We are open 8 a.m. to 5 p.m. Monday through Friday. Contact the BBB at or 651-699-1111, toll-free at 1-800-646-6222.