When you want to buy a home or a car and your credit score causes would-be creditors to shake their heads and escort you to the door, it’s tempting to respond to those high-volume hucksters on TV who promise to repair your credit.
They all make the same claims:
• “Credit problems? No problem!”
• “We can erase your bad credit — 100% guaranteed.”
• “Create a new credit identity — legally.”
• “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
The truth is, they can do none of that. They can’t erase bankruptcy, judgments, or overdue bills. The only thing they can do is help you get errors removed. Unless everything negative on your report is in error (such as when you’ve been a victim of identity theft), only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
While there are free and low-cost services available to help you, you won’t see them advertising. The only reason a credit repair company spends the money to advertise is to get you as a customer – and to enrich their own bank accounts at your expense – sometimes by many thousands of dollars.
By using them, you’ll only make your financial situation worse by paying them to do something you can easily do yourself. But even worse than losing money is the fact that you could be subject to prosecution if you follow some bad advice. (See items 4 & 5 below.)
If you think you need help removing errors and do decide to respond to a credit repair offer, look for these tell-tale signs of a scam:
1. Companies that want you to pay for credit repair services before they provide any services. (This is a violation of the Credit Repair Organizations Act.)
2. Companies that do not tell you your legal rights and what you can do for yourself for free.
3. Companies that recommend that you not contact a credit reporting company directly.
4. Companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
5. Companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
If anything a credit repair company suggests doesn’t feel right to you – just don’t do it.
Mike Clover:
CreditScoreQuick.comYour Resource for free credit score reports, fico scores, loans, credit cards, insurance and identity theft protection and credit repair advice.
