Credit Repair Scams And How To Protect Yourself
It is unfortunate that the recent credit crunch has caused a rapid rise in unethical and often illegal credit repair organizations. The credit repair industry as a whole is currently under close scrutiny by The Federal Trade Commission as they are working closely with local states to shut down companies that over promise and under deliver. These companies prey on people who are on the verge of bankruptcy and often make their situation worse.
If you find yourself in the situation that your debts, interest rates and credit rating are fast spiraling out of control you need to make intelligent decisions and steps to quickly improve your situation. If something sounds too good to be true it usually is so you need to use care as you take the steps to fix your bad credit, reduce your debt and get back on your feet.
If you're looking for some decisive steps to get started you can sign up for our Free Step by Step Credit Repair course delivered directly to you via email.
If you find yourself in a situation where you're prepared to pay someone to help fix your credit rating you want to look for an established company that does not have complaints logged against them by the Better Business Bureau, your state's Attorney General or the FTC.
Other danger signs to be wary of:
- Offers to "create a new identity" as these often include fraudulent social security scams.
- Claims to remove accurate negative information from your credit report - you can only remove inaccurate negative information (a good idea).
- Claims to be able to remove liens, debts and bankruptcies.
- Outrageous guarantees about how quickly or effectively they can turn your credit around.
- Asking for money up front before services are rendered - people have often signed contracts and send regular payments only to find the company is not using the money to reduce their debt but to pay their up-front fees. Only after they receive the several thousand dollars do they then begin to work for the client. Unfortunately, by that time the situation is usually much worse.
A legitimate credit repair firm can provide many of the following services:
- Have full disclosure about fees that they charge, including a small startup fee and pay as you go services that you can cancel at any time risk free.
- Give credible references of people they have successfully helped to provide proof that they know what they are doing.
- Have established relationships with the big three credit bureaus along with most creditors.
- Reveal that they can only remove inaccurate information on your credit report.
- Provide comprehensive counseling on budgeting and income requirements for debt servicing.
- Clearly reveal that it can often take 3-6 months and sometimes a year or more to do a complete credit repair process.
Unfortunately, there are times that due to complete loss of income and high debt there is no way for even the best of companies to repair a poor credit score. If a credit repair company finds that your situation is beyond their ability to repair it is their duty to let you know this information as soon as possible in the process and to give you advice on the best way to proceed.
Click for our Free Step by Step Credit Repair and Debt Analysis course delivered to your email
Legal credit repair is within the rights of every consumer - even if you have fairly good credit you want to review your report from time to time and remove any inaccurate information through a legally-acceptable channel. Our credit repair and debt analysis course has detailed steps on this process.
If you believe you may already have been a victim of a fraudulent credit repair company, immediately report the case to the Attorney General in your state, visit www.fraud.org to report your experience and file a claim with the Better Business Bureau.
Ftc Credit Report Repair Facts – for Consumers
The FTC claims that Credit Report Repair may be better for you if you do it yourself. You have seen advertisements on TV, local newspapers, internet. All of these credit report repair companies claim the following:
* "Credit Problem? No Problem!"
* " We can get rid of bad credit problems - 100% guaranteed"
* "We can remove bankruptcies, judgments, bad loans and tax liens from your credit file forever
The FTC says "Don't believe these statements. The only thing that will fix your credit is time, conscious effort, and a personal debt repayment plan will improve your credit report.
This article will explain how you can improve your creditworthiness and gives legitimate resources for low or no cost help.
The Scam
All over the US companies appeal to families and individuals that have bad credit problems. They promise for a fee, to clean up your credit report so you can get a car loan, a home mortgage, a job or even a insurance. The fact is, they cannot deliver. After you pay them hundred of dollars or even thousands of dollars in fees, these companies do absolutely nothing to improve your credit report. They typically vanish with your money says the FTC.
Warning Signs
If you feel credit repair with one of these companies is your choice, look out for the following.
* Companies that want you to pay before services are rendered
* Companies that don't tell you your legal rights and what you cannot do yourself for free
* Companies that recommend that you don't contact the credit reporting companies
* Companies that recommend you create a new identity by way of Identification Number.
* Companies that advise you to dispute all information in your credit report
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed services they claim they can provide. The FTC says to get what they claim they can do in written, and once it is done then pay them.
The FACTS
No one can legally remove accurate information from you credit report. If you owe the debt, it will be on there for 7 years from original collection date. The law allows you the consumer to dispute inaccurate information on your report for FREE. There is no cost to you for doing this. Everything a credit repair company does for a fee, you can do it yourself for FREE. This is all in accordance to the Fair Credit Reporting Act (FCRA)
v You are entitled to Free Credit Report if you are denied for the following
1. Credit Application
2. Insurance
3. Employment
You are to ask for this report within 60 days of receiving this notification. You are also entitled to the free report if you are unemployed and are about to apply for job, if you are on welfare, or if your report is inaccurate because of fraud including identity theft.
v All 3 Credit Bureaus - Equifax, Trans Union and Experian are required to provide you once a year with a Free Credit Report. In order to get this report you must go to annualcreditreport.com.
v You are allowed to dispute items that are not yours for free. Under the FCRA any company that is reporting information about you that is inaccurate, this information must be updated correctly. If you owe the debt it will not be removed.
Step One
The consumer credit reporting company that is reporting information incorrectly about you must be informed in writing what information is inaccurate. You are to include a copy of documents backing your claim. You are to clearly identify in the claim the following
1. Your full name
2. Address
3. The item in the report that you are disputing
4. The request that it should be removed or corrected
5. Enclose a copy of the report and circle the item in question.
Your credit report dispute letter may look something like this:
Date
You're Name
Mailing Address
City, State, Zip
Re: Disputing Inaccuracies on My Credit Report
Name of Credit Reporting Bureau
Mailing Address
City, State, Zip
Dear Sir or Madam:
I am writing for two (2) reasons:
1. To dispute certain information in my credit file; and
2. To have you investigate/re-investigate and remove inaccurate information from
my Credit Report and prevent its re-insertion. The item(s) I dispute are encircled
on the attached copy of the credit report and further identified by (identify the
items by name of source, such as creditor or tax court, etc. and identify type of
item, such as credit account, judgment, etc.)This item is (inaccurate or
incomplete) because (describe what is inaccurate or incomplete and why). I am
requesting that the item be deleted (or whatever specific change you are
requesting) to correct the information.(If you are enclosing documents such as
copies of cancelled checks, payment records, court documents, send copies
only, you should always retain the originals -- and use the following sentence.)
Enclosed are copies of the following documents supporting my position:
1.
2.
3.
Please reinvestigate this (these) matter(s) and (delete or correct) the disputed
items within the time frame required by the Fair Credit Reporting Act (FCRA) and
inform me in writing of the outcome. Thank you for your time and consideration in
this matter.
Sincerely,
________________________
(Signature)
Your name
Once the investigation is complete, whether they removed the item or not, the creditor must give you something in writing. If the information was deemed incorrect, then they must remove it, and not put it back on your report.
Step Two
Advise the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies only, not your original supporting your claim. The creditors usually provide an address for disputes. If the creditor reports the items to the 3 credit bureaus, they must include the dispute during the reporting time. If you are correct, the creditor must remove the item from the Bureaus it's reporting too.
For information on "How to Dispute Credit Report Errors, go to ftc.gov/credit.
The reporting of correct information
When negative information is being reported about you, and it's accurate the only way it will go away is with time. A consumer credit reporting company can report negative information about you for 7 years and bankruptcies for 10 years. Judgments can be reported for 7 years or until the statue of limitations run out.
Credit Repair Organization Act
By law credit repair companies must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign any contract. They must also give you a written contract that specifies your rights and obligations. Read these documents carefully before you sign anything.
Example of what a credit report company cannot do:
v Charge you for anything until services have been completed
v Make false claims about there services
v Provide any services until they have your signature on a written contract and have completed a 3 day waiting period. During this time you may cancel the contract without any fees occurred.
v Payment terms for services rendered, along with total cost
v Detailed description of services you are paying for
v How long it will take to achieve results
v Any guarantees they offer
v Company address and name
Check your Credit Report at least 4 to 5 times a year.
Even if you don't have poor credit, you need to know what's on your credit report. Here are some good reasons per the FTC.
v Because the information it contains may affect whether you get a loan and the payment terms for that loan
v Make sure the information is accurate, complete, and up to date before you apply for a mortgage, credit card, car, insurance or even a job.
v To help guard against identity theft
Hopefully this has shed some light on credit repair, and the importance of have a recent copy of your free credit report.
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