The ads from credit repair companies pop up everywhere—on telephone polls, in newspapers, on TV and radio, in your email and on the Internet.
You’ll see similar claims over and over. But can credit repair companies be trusted?
Consumer credit counselors at Clearpoint advise consumers to not believe these claims as they’re very likely signs of a scam. In reality, there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes knowledge, time and effort to stick with a personal debt repayment plan. See how to improve your credit on your own.
[Related: learn about debt settlement and bill consolidation and why these aren’t good options either for improving your credit score]
Credit repair companies can’t deliver an improved credit report using the misleading tactics they promote. No one can remove accurate negative information from your credit report. So after you pay one of these companies hundreds or thousands of dollars, you’re left with the same credit report but out your fees.
According to the FTC, here’s how to evaluate the trustworthiness of credit repair companies. Be cautious if:
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: 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. Even if a credit repair company advises you to do these things, you could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Again, no one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for to do so. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. The Fair Credit Reporting Act (FCRA) reads:
Order reports from each of the three consumer reporting companies at the same time, or stagger your requests, ordering one from each different company every four months. (This will allow you to keep an up-to-date check on your credit without having to pay) Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. The above website and phone number are the only legitimate contacts for Americans who want to access their free credit reports. Other companies seek to misrepresent their services as these services and they will charge you various fees. At annualcreditreport.com, the consumer reporting companies may encourage you to purchase a credit score, but you are under no obligation to do so to receive your reports.
Credit repair companies 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 you sign anything. And before signing, know that a credit repair company cannot:
Before you sign a contract, be sure it specifies:
Consider contacting a nonprofit consumer credit counseling organization like Clearpoint. Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials. Certified counselors are trained in consumer credit, money and debt management and budgeting. Your counselor will discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions. Call 800.750.2227 (CCCS) to schedule a free session or get started now online.
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