If you are in the process of cleaning up your credit, you need to go into the process with your eyes wide open. Although most credit-repair attorneys and companies are honest, there are those who prey on unaware and uneducated people, eager to take their money and not much more. Taking steps to clean up your credit is positive action that will help you now and in the future so kudos to you for taking the responsibility to do something about it. However, just as with anything, you need to put on your armor and be prepared for the unexpected.
Unfortunately, the number of credit-repair companies taking consumers for a ride is climbing. These companies promise the will completely fix any bad information on your report and some even claim they can erase it. In addition to now doing what they promise, some are leading you down a path of illegal action. The price for these bogus services is between $50 and $1,000 but considering they do little to nothing, you end up in a big mess. Typically, a credit report scam will tell you anything you want to hear. These companies will take your money and then before anything is done, disappear.
While it would be nice to simply write a letter and be done with it, cleaning up negative credit is not quite that easy. Keep in mind that the appropriate method is not necessarily difficult but it does require some effort on your part. While a company can promise you the moon, you need to know the facts. For starters, your credit history is maintained by private companies called credit bureaus or agencies. These agencies gather information that comes from mortgage companies, banks, credit card companies, department stores, and so on. In addition, it takes time to correct a negative credit history. Companies that promise to have your report cleaned up in days or weeks, is probably defrauding you.
Credit bureaus are allowed by law to report bankruptcies for up to ten years and other negative information up to seven years. However, that does not automatically mean the information will remain on the report that long, just that it could. Keep in mind that your credit report can contain other negative information, which could be reported forever. This would include any credit of $50,000 or more, a life insurance policy that is worth $50,000 or more, and a job whereby you earn $20,000 or more a year. The thing to remember is that if you find inaccurate information on your credit report, you can spend less than $20 per report or $35 to get a three-in-one report, coming from all three credit bureaus, and fix the problem yourself. Therefore, spending hundreds of dollars to have someone fix it for you is outrageous.
Okay, so how to you spot scams? With knowledge and an eagle eye, you can spot something that simply seems too good to be true. First, if you are ever contacted by or you contact a company for credit repair assistance and they falsely promise to remove negative information, you are protected with a shield of armor being the Federal Trade Commission. You can follow up or file a complaint by contacting the Attorney General’s Consumer Protection Hotline, asking if other complaints have been filed against the company. In addition, if the credit-repair company ever tells you that truthful information can be removed or changed as a means of improving your credit, or if the company claims old or inaccurate information can be removed, heads up – both statements are false.
You also want to put a shield anytime you are asked for a lot of money. Some companies are very brazen, not shy whatsoever about asking for large sums. Even if that company says they will offer you a full, money-back guarantee, that means nothing. Many people who file for bankruptcy find they are the target of scams. You would hear the offer called “File Segregation”, which means they are promising to hide any unfavorable information on your credit report from creditors. In addition to not working, this scam is illegal, which can result in you facing hefty fines or even imprisonment.
Other types of credit-repair scams include credit by phone, which means you would be required to call a high-priced 900 number or pay-per-call to work with the company. If you are offered a gold or platinum credit card promotion that promises to help build or rebuild your credit, this too is untrue. These “credit cards” actually only let you buy from special catalogs, meaning they are not true credit cards at all. Finally, put your guard up against checking account scams that require you to provide the company with your account information. At no time will you be required to disclose this type of information so be wise and go through the clean-up process the right way.
