Credit Repair Scams And How To Avoid Them

When it comes to repairing your credit there is no quick fix. It takes time, patience and commitment on your part to get your financial life back on track.

However, this reality does not stop many credit repair scam companies from making amazing claims that they can erase your bad debt instantly or remove those bankruptcy entries on your file that are destroying your credit score. If you come across such firms the best advise is to give them a very wide birth.

How To Spot Credit Repair Scams

Today we live in a society that is becoming increasingly dependent on credit. In many cases people have become so much dependent on credit that they can no longer function without it. This over dependence means people are at the mercy of companies that claim they can solve their debt problems.

When people are desperate to get a loan but cannot because of a poor credit record they put themselves in a very vulnerable position. This makes them easy prey for credit repair companies who make fraudulent and misleading claims they cannot deliver on.

People are made promises by these firms that if they pay a fee all their debt problems will disappear and they will get that loan for their car or mortgage for their dream home. Many people fall for this because they want an easy way out however, life does not work that way.

Many of the claims made by these companies are false. For example, public records that involve foreclosures, chapter 7 or 13 bankruptcy and county court judgments can wreck havoc on your credit score. Many of these credit repair companies make claims they can remove these accurate entries from your credit file.

There is no company or service who can do this and if you paid money based on this promise it will never be fulfilled. If they did it would be illegal. The only thing that can remove public notices from your credit file is time.

For your protection here are are few tell tale signs that will help you identify if a credit repair company is legit:

They require you to pay a fee first before they help you. It states very clearly on the Credit Repair Organizations Act.
Act that firms cannot ask for money unless they have provided the service first.
They advise that they can remove negative details from you credit report that are correct and accurate.
The company fails to inform you of your consumer rights under the Fair Credit Reporting Act.
You are not given a written contract to check before signing it.
The contract is missing details that include, the fee you are being charged and a schedule of when the services will be carried out.
The advise you to create a new credit identity so that you can start with a clean slate.

The last point in particular can get you into legal hot water because you are creating a false identity and filling out a loan application with false information is fraud and therefore, a federal crime.

How You Can Improve Your Credit Report For Free

What many credit repair agencies can do legally you can do yourself. For example, many firms advertise services to remove inaccurate and out of date information from your credit report and charge a fee for this. You can do this yourself and the only thing it will cost you is the price of a stamp.

Under the Fair Credit Reporting Act anyone is entitled to an annual credit report from each of the 3 major credit bureaus if they have had a credit application rejected based on the financial data provided by the bureaus. Under the Act you have the right to dispute any details on your credit file.

If you find an error then make a copy of the report highlight these errors and include any supporting documents along with your dispute letter requesting an investigation. Under statute law the credit collection agencies must review your case within 30 days.

If an error is found then the credit bureau will send you back a copy of the updated report. Your can also request that the bureau send the corrected report to any organization that has requested your file in the previous six months.

You can download these reports from the federal trade commission FTC site www.annualcreditreport.com.

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