Have you heard any of the following claims? “We can repair your credit in just 10 days – GUARANTEED!” “We can remove negative items from your credit file and replace them with positive ones!” “We can help you create a new identity with perfect credit!”… If any of these claims sound too good to be true, that’s because they are. Don’t be scammed. If you commit fraud by following illegal advice, you could be subject to prosecution.
Major warning signs to look for from scam credit repair companies are companies that:
- Claim they are able to create a new identity, employer identification number, or social security number for you
- Claim you need to pay them to dispute inaccurate items in your credit report (you can do this yourself for free)
- Advise you to dispute ACCURATE items in your credit report
- Do not explain your legal rights and personal responsibilities when it comes to credit repair
- Do not provide you with a clear credit repair contract that includes all of the services they will provide along with a total cost and completion date
- Expect you to pay costs up front before completing any counseling or credit repair services.
In September 1996, the Federal Trade Commission enacted the Credit Repair Organizations Act (CROA) to protect consumers from scam artists posing as credit repair companies. Some specific protections are:
- Credit repair companies cannot make claims about the services they provide that are illegal. Remember, if it sounds too good to be true, it probably is.
- Credit repair companies cannot charge you for any services up front. You can only be charged once their promised (and legal) services have been completed.
- Credit repair companies cannot perform any services without a signed contract stating the exact measures they will take to help you repair your credit, how much it will cost in total, and how long it will take before you see results.
- All credit repair companies must complete a three day waiting period after you sign the contract to give you the opportunity to review and/or cancel the contract without obligation if you change your mind.
If you feel you have been a victimized by a shady credit repair organization, you have the right to sue them under the Credit Repair Organizations Act (CROA). You may be entitled to damages that you have suffered due to their unethical activities. You can file a complaint by with the Federal Trade Commission (FTC) online at https://www.ftccomplaintassistant.gov or by calling 1-877-FTC-HELP.
By: Ken S
Archive for January, 2010
Is Credit Repair A Scam?
January 27th, 2010
If you want to find an industry with a horrible reputation look no further than credit repair. Over the years I have seen countless companies coming to my office wanting me to send all of my applicants for a mortgage who had bad credit to them. Most of them stated the same thing, “I will get it removed.” Let’s face it, if you owe the debt, it will not be removed. Most of the creditors sell debts owed to collections companies. These collections companies will not go away until you settle on the debt or pay it in full. The 3 credit bureaus do have to respond to a dispute within 30 days which must be verified. If the dispute is not verified, it must be removed. Credit Repair companies will dispute derogatory information on your credit report for you, but you can do the same thing yourself for free. You can also dispute items from your credit report on-line now.
The advantage of using a reputable credit restoration company is they dedicate all their time during your normal working ours to dispute inaccuracies on your report. Most working people don’t have time to do this. So you are paying someone else to do this since you don’t have the time to do it yourself. So is Credit Repair a scam? Well not exactly. They are a legitimate business as long as they give you the correct information. Can they get information removed you owe? They can if the bureaus don’t respond in time, and believe me the bureaus are set up to respond quickly. There systems are automated now. They can blast through a dispute letter in a few key strokes. The Bureaus will also disregard repetitive disputes as “frivolous.” Credit restoration companies claim that if the following inaccuracies are on your credit report, it has to be removed.
Credit Bureaus reporting: $190.02
Should be reporting: $190.20
The FTC claims that this is false.
So the big question is Credit Repair a SCAM? Well there are a lot of credit repair companies out there that just take your money, and hope you go a way. So make sure you get references when using a credit restoration company. There are reputable companies out there, and there are companies that just take your money. It is important you know what is on your credit report, and take the time to learn how to fix errors on your report, or pay a company to provdie the service for you.
By: Mike Clover
Does "Credit Repair" Really Work?
January 27th, 2010
There are a lot of “credit repair” companies out there, and they promise a lot. How good are their promises, and what can they really do for you. We will take a look at the realities of the credit repair business in this article.
Credit Repair involves a company contacting the three major credit bureaus for you, on your behalf, and disputing derogatory items on your credit report.
Understand this, first of all: the purpose of the three major credit bureaus, Equifax, Transunion and Experian, is to accurately report a client’s credit and payment history to potential lenders.
They generally do a very good job of fulfilling this mission. If items are true, you really have no right to expect those items to be removed before seven years have passed, or, in the case of bankruptcy, ten years have gone by.
That being said, the credit repair companies basically exploit a part of the law, under the federal Fair Credit Reporting Act, which states that a consumer has the right to dispute any item they feel or believe to be inaccurate on their credit report. A disputed item can be presented to the merchant who granted the credit, and that merchant has 30 days to validate that that debt is correct. If the merchant fails, for any reason, to verify that debt as accurate within a 30 day period from the time the dispute is filed, then, by law, that derogatory item must be removed from your credit report!
In the real world, especially during the Christmas holiday season, merchants often do not have a chance to respond within the required 30 days and verify legitimate debts, so the credit repair company will then be able to have that derogatory item removed. Other merchants may have gone out of business, etc., so it is not necessary to wait a full 7 years to have that item drop off your credit report.
You as a credit consumer can dispute any item on your own credit report. Are you able to do that? Are you a good letter writer? Do you know how to navigate the complexities of obtaining and updating your reports? Some people can, some people cannot. The credit repair companies will do all this work for you. And they are good at it, they do it every day, all day long.
There are a lot of credit repair companies, however, that promise too much, and charge too much up front. Some companies want you to pay hundreds of dollars up front before they go to work for you.
A good credit repair company will charge you by the month. The first month may involve a small set-up fee in addition to the monthly fee. You are not committed to a contract, you use their services for as many months as they need to get your credit scores improved sufficiently. For example, $75 to set up and $49 a month, no contract.
Under the law, a credit repair company cannot usually obtain your credit reports for you, they will advise you as to how to obtain them, whether for a fee or free. You need to provide them with your credit reports that they can work from to begin the repair process.
Everyone has a right, under federal law, to a free annual credit report. Google this and you will find the site for this.
I am a mortgage broker and I deal every day with clients whose credit is not up to snuff, and I do have a credit repair company I refer clients to, and, 3 or 6 months down the road, they are in better shape and I can then help them get the loan they seek.
As always, seek the advice of a certified financial planner or mortgage planner when you begin the credit repair process, so you can steer clear of the scammers and get aligned with a good credit repair company.
By: James Hussher
