Protect Yourself Against Unscrupulous Credit Repair Specialists Promising Instant Credit Repair
If you're seeking to improve your negative credit history, be wary of purported
credit repair specialists offering quick
credit repair service.
Many of these
credit repair specialists claim they can eliminate your negative
credit card debt information and create a new credit identity for you easily and
legally. Some
credit repair specialists offer
free credit repair information in an attempt to lure unsuspecting consumers into
purchasing a
credit repair service. As a person struggling with the consequences of
having bad credit, you may be tempted to buy into this
credit repair scam. But
before you start junking the alternatives offered by a
credit counseling agency or
debt consolidation firm in favor of instant
credit repair,
it's important to know your rights as a consumer and how a fraudulent
credit repair service works. By educating yourself about what you may and may not
legally do about your credit report and
credit card debt information, you can avoid
falling prey to unscrupulous
credit repair specialists.
How Dishonest Credit Repair Service Providers Operate
Deceptive
credit repair specialists instruct the consumer to obtain an Employer
Identification Number (EIN) from the U.S. Internal Revenue Service. Next, they advise the consumer
to establish a new mailing address, phone number and a set of credit references. Finally,
fraudulent
credit repair specialists direct the individual to manufacture a new
credit report by using the EIN instead of the Social Security Number when applying for new
credit.
No One Can Remove Accurate Credit Card Debt Information From Your Credit Report
Credit repair service providers can only legally dispute inaccurate or outdated
information on your credit report, a process that you can do yourself for free.
Credit card debt information, judgments, liens, bad credit and bankruptcies will
remain on your credit report for up to 7 or 10 years from the time they are first reported.
Unless your bad credit standing is caused by inaccurate credit information, such as erroneous
credit card debt information, the only way to improve your credit standing
legally is to take proactive steps to pay off your debts. You may do so by applying for a
debt consolidation loan, enlisting the services of a
debt consolidation firm or receiving assistance from a
credit counseling agency.
Beware of Credit Repair Practices That May Constitute a Legal Violation
Certain practices recommended by unscrupulous
credit repair specialists could land
you in legal trouble. You could be charged or prosecuted under U.S. federal law if you obtain an
EIN from the IRS under false pretenses, misrepresent your Social Security Number, make false
statements on a loan or credit application and use the mail or telephone to apply for credit and
provide false information.
The Credit Repair Organizations Act requires
credit repair service providers to
furnish you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign
a contract. In addition,
credit repair service providers are required to inform
you of your rights and obligations in a written contract. The contract must include a description
of all services to be performed, the payment terms for such services, the time it will take to
achieve results, any guarantees they offer and a statement that you may cancel the contract any
time within a three-day waiting period at no charge. Lastly,
credit repair specialists cannot charge you any fees until they have carried out
the promised services. This means the
free credit repair information they offer
is not an act of largesse but a mere marketing ploy.
Incidentally, you may be able to evaluate whether a
credit repair service provider
does legitimate service or not based on the
free credit repair information the
company gives you. By law,
credit repair specialists cannot make false claims
about their services. If the
free credit repair information
alleges that the
credit repair service provider knows of inside secrets to creating a new,
blemish-free credit report, then the company is probably dishonest. The truth is that there are
no inside secrets to building a positive credit standing. The only sure way to improve your credit
history is to make good-faith efforts to pay off your debts.
Alternatives Offered by a Credit Counseling Agency or a Debt Consolidation Firm
A
credit counseling agency or a
debt consolidation firm offers
legitimate alternatives to
credit repair service. A
credit counseling agency will review your credit status, expenses and monthly
income and determines the best options for meeting your financial obligations. In addition to
proposing solutions to your current financial problems, a
credit counseling agency
will educate you on how to avoid future credit problems. Dealing with a legitimate
credit counseling agency, especially a non-profit one, may cost you little or
nothing at all.
Debt consolidation is another option you can explore to fix your
damaged credit. A
debt consolidation firm negotiates with your creditors to have
the interest rates on your current loans lowered. Next, the
debt consolidation firm
arranges a
debt consolidation loan that will replace all your current
unstructured debts. You will repay this
debt consolidation loan to your new
lender.
Debt consolidation
gives you the benefit of paying a lower monthly
installment, the convenience of making a single monthly payment instead of multiple payments
and the assurance of having more money left every month for savings or other expenses.
For more information on Debt Counseling and Debt Consolidation, visit:
