These companies promise you that they can restore your credit worthiness for a fee and purport to guarantee they can remove negative information from your credit reports -even if the negative information is accurate and timely.
In truth, they cannot substantially improve most peoples' credit reports or profiles by permanently removing bankruptcies, charge-offs, late payments, and other negative information from your credit reports, especially when such information is accurate and not obsolete.
"This fraud is particularly appalling because it preys on consumers who already find themselves in financial difficulty as a result of layoffs, divorce, or heavy medical expenses. Credit repair scams literally kick consumers when they are down, fostering and exploiting false hopes of building a better credit history after suffering through tough times financially."
Although there are legitimate, not-for-profit credit counseling services, the FTC has never seen a legitimate credit repair company. You must understand that no one can erase negative credit information if it is accurate and current, and anything that is inaccurate can be corrected at little or no cost.
Federal law allows credit bureaus, which compile your credit history information, to report all truthful information, including negative information for seven years (bankruptcies can be reported for ten years), and the credit repair operators cannot and do not get the information removed.
Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. It generally takes six years for a bad debt to come off a file, regardless of any activity from a credit clinic.
Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment within the last sixty days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureau's name, address, and telephone number.
You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents.
If you decide to respond to a credit repair offer, beware of companies that:
|want you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, companies cannot require you to pay until they have completed the promised services.|
|don't tell you your rights and what you can do "yourself" for free.|
|recommend that you not contact a credit bureau directly.|
|suggest that you try to invent a "new" credit report by applying for an Employer Identification Number instead of using your Social Security number.|
|advise you to dispute all information in your credit report or take any action that sounds questionable, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.|
|offer a second mortgage or home equity line of credit. While these loans may allow you to consolidate your debt, they also require your home as collateral.|