Learn How To Avoid Credit Repair Scams
Watch out for companies that say they'll "fix"
bad credit for a fee often substantial, usually payable in advance. So-called
credit repair clinics say they will arrange to have negative credit information
removed from your record including information about bankruptcies and default
judgments.
The Consumer Reporting Act provides rules
regarding how long this information may appear in a consumer report. No
credit repair clinic has the authority to have negative information removed
from a consumer report unless it is inaccurate, or the rule in the act
requires that the information be removed
Stay away from a credit repair firm that
does any of the following:
1. Promises you the moon. Most negative
information stays on your credit report for seven years; judgments and
lawsuits are reported for seven years or until the statute of limitations
runs out; bankruptcy remain for up to 10 years.
2. Offers to help you get a new credit
identity. The company tells you to apply for an Employer Identification
Number or EIN number. Which has the same number of digits as a Social Security
number. Then they instruct you to apply for credit using this and a different
address. This practice, known as file segregation, is a federal and state
felony.
3. Advises you to dispute all negative
information in your credit report. The company will flood the top 3 credit
bureaus with letters disputing both inaccurate and accurate information.
The theory being that most creditors will fail to respond within 30 days
and that item will be permanently deleted.
4. Asks you to pay for credit repair before
services are provided. This is a direct violation of the Credit Repair
Organizations Act, which states that credit repair companies can't charge
you fees until after they have completed the promised services.
Be wary of advertisements promising to
"fix" bad credit. Credit repair companies may claim to improve consumers
poor credit ratings, but, in reality, no credit repairer has the power
to change or erase accurate information in a consumer s file.
The Credit Repair Organizations Act:
By law, credit repair organizations must
give you a copy of the "Consumer Credit File Rights Under State and Federal
Law" before you sign a contract. They also must give you a written contract
that spells out your rights and obligations. Read these documents before
signing the contract
Author: Vincent Dail of Raise
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