If you're in trouble with your credit, you're bound to notice the countless television commercials and online advertisements offering credit repair services. They all claim to provide you with the best solution for your credit woes. And, the sales pitches can be very tempting. Many credit repair companies even guarantee their services.
The truth is, when it comes to credit repair, the best person for the job is you. While you can always use credit counseling, a professional financial planner or a reputable legal credit repair service provider, you need to choose wisely to avoid being scammed.
The Scam
Credit repair companies continuously promote their services to consumers with poor credit ratings. Their offers include not only cleaning up credit reports but also assistance in obtaining a new car loan or home mortgage, or even a new job. The problem is that these companies will take your payments but will not -- and cannot -- make good on their promises. And when you try to follow up with them, you'd find they're nowhere to be found.
How to Spot a Credit Repair Scam
If you strongly feel the need for help in going about repairing your credit, you will have to choose carefully the credit repair service to use. To avoid being scammed, look for the warning signs that the company you're dealing with is a fraud and should not be trusted. These red flags are:
1. If the credit repair company wants you to pay fees upfront, before rendering any services to you.
2. If the credit repair company will not disclose your legal rights when it comes to credit repairs.
3. If the credit repair company does not advise you on what can do on your own to work on your credit. This advice should be free of charge.
4. If the credit repair company tells you to get in touch with the credit reporting bureau directly.
5. If the credit repair company's solution to your credit problem is through the creation of a new credit identity.
6. If the credit repair company advises you to dispute all the information contained in your credit report.
Be wary of the above-mentioned practices and red flags! They can only get you into trouble. Stay away from companies that encourage you to obtain an Employer Identification Number (EIN) and use that to get a new credit report instead of your old Social Security Number. Do remember that the EIN is only for the business owner and it's a federal crime to secure one for any other purposes, such as creating a new credit personality. You should also know that according to the Credit Repair Organization Act, you're not required to pay a credit repair company until it has completely performed all its promised services.
Your best protection against fraudulent credit repair companies is, of course, trying to repair your credit rating on your own. You should periodically check your credit reports and dispute any errors before filing any loan application. A regular review of your credit card statements and credit report will also help alert you to any potential identity theft that can bring about even more serious repercussions.
Using a Counselor
Consider visiting a credit counselor. Consultations are often free -or or at most, you may be charged a minimal monthly fee for certain services, but if you can't afford that, they are often waived. To find a reputable agency in your area that can help with your financial needs and budget planning visit either the National Foundation for Credit Counseling (nfcc.org) or the Association of Independent Consumer Credit Counseling Agencies (aiccca.org).
The truth is, when it comes to credit repair, the best person for the job is you. While you can always use credit counseling, a professional financial planner or a reputable legal credit repair service provider, you need to choose wisely to avoid being scammed.
The Scam
Credit repair companies continuously promote their services to consumers with poor credit ratings. Their offers include not only cleaning up credit reports but also assistance in obtaining a new car loan or home mortgage, or even a new job. The problem is that these companies will take your payments but will not -- and cannot -- make good on their promises. And when you try to follow up with them, you'd find they're nowhere to be found.
How to Spot a Credit Repair Scam
If you strongly feel the need for help in going about repairing your credit, you will have to choose carefully the credit repair service to use. To avoid being scammed, look for the warning signs that the company you're dealing with is a fraud and should not be trusted. These red flags are:
1. If the credit repair company wants you to pay fees upfront, before rendering any services to you.
2. If the credit repair company will not disclose your legal rights when it comes to credit repairs.
3. If the credit repair company does not advise you on what can do on your own to work on your credit. This advice should be free of charge.
4. If the credit repair company tells you to get in touch with the credit reporting bureau directly.
5. If the credit repair company's solution to your credit problem is through the creation of a new credit identity.
6. If the credit repair company advises you to dispute all the information contained in your credit report.
Be wary of the above-mentioned practices and red flags! They can only get you into trouble. Stay away from companies that encourage you to obtain an Employer Identification Number (EIN) and use that to get a new credit report instead of your old Social Security Number. Do remember that the EIN is only for the business owner and it's a federal crime to secure one for any other purposes, such as creating a new credit personality. You should also know that according to the Credit Repair Organization Act, you're not required to pay a credit repair company until it has completely performed all its promised services.
Your best protection against fraudulent credit repair companies is, of course, trying to repair your credit rating on your own. You should periodically check your credit reports and dispute any errors before filing any loan application. A regular review of your credit card statements and credit report will also help alert you to any potential identity theft that can bring about even more serious repercussions.
Using a Counselor
Consider visiting a credit counselor. Consultations are often free -or or at most, you may be charged a minimal monthly fee for certain services, but if you can't afford that, they are often waived. To find a reputable agency in your area that can help with your financial needs and budget planning visit either the National Foundation for Credit Counseling (nfcc.org) or the Association of Independent Consumer Credit Counseling Agencies (aiccca.org).
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I completely agree, there are far too many companies looking to take advantage of consumers with poor credit scores, coupled with the tremendous amount of people needing assistance, there is a perfect storm brewing. I use a free credit repair kit I found here on stumble a few months back and was able to remove most of the negative info on my reports. You can find the kit here at www.expert-credit-advice.com but I have to warn you, it is time consuming and can be pretty annoying dealing with equifax, experian and transunion. If you do not want to repair your credit by yourself, whatever company you hire, make sure they have a good Better business bureau report and that they do not charge upfront fees.