One of the most critical elements which affects “how” a credit restoration company operates is determined by its’ payment structure. One of the most common payment structures of large companies or law firms doing credit restoration is that of the monthly “auto-debit” fee. In this structure the consumer usually pays $49 to $99 up front and then a monthly fee of $39 to
$49 per month. While there is an advantage to this method (affordability) with it comes many disadvantages.
1.)The first disadvantage this structure creates is that it gives the company absolutely no incentive to work quickly or aggressively on behalf of the consumer. In fact, the opposite is true. The longer they take the longer they will continue to collect their monthly fee! In most cases this structure leads to slow results over a very long period of time. Looking at it logically, this shouldn’t come as a surprise.
2.)The other challenge within this structure is the actual amount of time, effort and resources which a company or law firm can reasonably allocate on a consumer’s behalf. Remember, any large business has a tremendous amount of overhead which quickly chews up most of that monthly fee. Out of that $39 to $49 there are monthly expenses including but not limited to: Advertising, Office Rent and Utilities, Employee Payroll and Taxes, Health Insurance, Phone Service, Office Supplies, Refunds, Computer Maintenance and Programming, Website Administration, Office Supplies and let’s not forget postage for mailing letters to creditors, collection agencies and credit bureaus. A much simpler way to think of this is by imagining if you had a client paying you $39 a month; how much work would you be willing to do?
3.)One of the biggest challenges credit repair companies charging low monthly fees run into is being forced to rely on the use of Automated “Boiler Plate” Dispute and Correspondence Letters. Boiler Plate Letters are simple form letters which are used for ALL consumers (one format fits all). Once set up in a computer program with the consumers’ information they are “shot out” automatically on behalf of the consumers needs (i.e. disputing a late pay, charge-off or judgment etc).
The problem here is that when a credit repair company has thousands of clients they are shooting these form letters out for, the creditors, collection agencies and credit bureaus can take notice of these letters being used over and over and discover your correspondence is coming from a third party (i.e.
credit repair company or law firm) and in some cases ignore it or (worse yet) mark the dispute frivolous and flag your credit report. I spoke with a man recently who was on the inside of a large credit repair company who informed me they had an archive of over 10,000 boiler plate letters on file to avoid this problem. Of course, they charged customers by the month.
$49 per month. While there is an advantage to this method (affordability) with it comes many disadvantages.
1.)The first disadvantage this structure creates is that it gives the company absolutely no incentive to work quickly or aggressively on behalf of the consumer. In fact, the opposite is true. The longer they take the longer they will continue to collect their monthly fee! In most cases this structure leads to slow results over a very long period of time. Looking at it logically, this shouldn’t come as a surprise.
2.)The other challenge within this structure is the actual amount of time, effort and resources which a company or law firm can reasonably allocate on a consumer’s behalf. Remember, any large business has a tremendous amount of overhead which quickly chews up most of that monthly fee. Out of that $39 to $49 there are monthly expenses including but not limited to: Advertising, Office Rent and Utilities, Employee Payroll and Taxes, Health Insurance, Phone Service, Office Supplies, Refunds, Computer Maintenance and Programming, Website Administration, Office Supplies and let’s not forget postage for mailing letters to creditors, collection agencies and credit bureaus. A much simpler way to think of this is by imagining if you had a client paying you $39 a month; how much work would you be willing to do?
3.)One of the biggest challenges credit repair companies charging low monthly fees run into is being forced to rely on the use of Automated “Boiler Plate” Dispute and Correspondence Letters. Boiler Plate Letters are simple form letters which are used for ALL consumers (one format fits all). Once set up in a computer program with the consumers’ information they are “shot out” automatically on behalf of the consumers needs (i.e. disputing a late pay, charge-off or judgment etc).
The problem here is that when a credit repair company has thousands of clients they are shooting these form letters out for, the creditors, collection agencies and credit bureaus can take notice of these letters being used over and over and discover your correspondence is coming from a third party (i.e.
credit repair company or law firm) and in some cases ignore it or (worse yet) mark the dispute frivolous and flag your credit report. I spoke with a man recently who was on the inside of a large credit repair company who informed me they had an archive of over 10,000 boiler plate letters on file to avoid this problem. Of course, they charged customers by the month.
