Posted: Sun Feb 26, 2006 11:57 pm Post subject: Common Credit Repair Scams Affecting Debtors
There are companies claiming to get rid off negative items from your credit report so that a better credit score gets recorded within a short period. But most of them fail to deliver the appropriate services and customers end up losing money. Even the Federal Trade Commission (FTC) is of the opinion that there is hardly any legitimate credit repair company. Therefore, it is better to try and improve your credit score yourself rather than spend more on the services provided by these organizations.
What are the common credit repair scams?
Credit repair services nowadays involve a lot of scams, thereby charging borrowers against false promises of providing better credit rating. Some of the scams are given below:
Temporary removal of negative items:
Credit repair companies may claim that they have fair business relationship with a credit bureau. They deluge the bureau with disputes over the debts recorded in your credit report. These debts may disappear from your report once the bureau starts the investigation.
The credit repair company charges a fee in return of the temporary removal of negative items from your report. Moreover, these companies demand a charge upfront, which goes against the Credit Repair Organizations Act. There are also companies offering services in order to convince creditors that you don't owe any debt. But this isn't effective and in the end, you are forced to give up the claim.
Applying for a new credit report:
Another credit repair scam involves the companies demanding that they can help you get a new clean credit report. Some firms will help customers apply for a new taxpayer's identification number or Employer Identification Number (also known as EIN) in order to build a new credit history. But this is not a legal process, and the new report carries similar information as in the previous report, although you have a separate identification number.
Ensuring a clean report:
Credit repair companies may also claim to clean up your credit fast and help you get a mortgage or credit card through their contacts. They demand a lot of money in exchange of such services. But in reality, these organizations pretend to offer credit counseling help or try to act as mortgage companies and finally they leave the customers after pulling out a lot of cash. This is the most popular scam nowadays and the costliest one too.
How can you protect yourself from such scams?
In order to prevent yourself from being a victim of such scams, you can take the help of legitimate counselors. They will, in fact, discuss on your financial details and suggest specific ways to come out of your problems. But before you accept such suggestions, you should consider the following aspects.
Verify the true identity of the credit repair company.
Check with your state's regulatory or consumer offices as to whether it has resolved similar problems before.
The mode and amount of payment.
You should have the positive as well as negative aspects of the company's plans.
Be careful when the company contacts you at its own interest.
Consumers have certain rights under The Credit Repair Organization Act. Any false claim by a credit repair company is prohibited by law and it can't charge you until it has provided you with its services. Through a written contract, these companies must disclose your legal rights, the services that they are going to perform and the required time period. The contract should also mention the total cost to be charged and any guarantee that may be offered. As a consumer, you have three days to cancel the contract without paying any charge.
If you feel you are a victim of any credit repair scam, you may report it to the local consumer affairs office or state Attorney General for justice. You may also lodge a complaint with the FTC that ensures protection of customers against any kind of fraud. The best way to avoid credit repair scams is to make suitable plans for managing personal finance and debt payments. This will ensure a clean credit report and hence a better credit rating.
I agree with you jessica, even my wife almost got into this kind of trap but thank to charles (my friend) who gave us knowledge on this and save us from getting into trouble.
Yeah you are right, we should not trust any companies who claim to repair your credit score with ease.
Thanks jessica for such lovely knowledge. _________________ Procrastination is the enemy of your financial sucess
Jessica
