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Beware of Quick Fix Credit Repair Services |
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Devita Pitts's experience with a credit repair services company was a learning experience that cost $500. After a radio station promotion early in the year, she signed up with a credit repair services company she had heard could get negative information out of her credit report. With a $25 deposit, two more payments added up to $500, paid to the company. They were to have copies of her credit report sent to her from the three main reporting agencies, TransUnion, Experian and Equifax. Then she was to pass them on to the credit repair services agency to rectify it. From February through May she was unable to even speak to anyone in the credit repair services firm. When she eventually met them, there was still no progress. No service, no refund. Pitts considers it a total waste of money and blames her rashness on her desperation. This year combating illegal credit repair services scams like the one that duped Pitts, were the Better Business Bureau of the mid-south, Federal Trade Commission, Department of Justice and other federal, state and local agencies surfing the World Wide Web, according to John Myers, BBB president. The BBB passes the information it finds to the FTC. The feds send warnings and notices to website operators against violation of the Credit Repair Services Organizations Act. The BBB compiled a list of nine Memphis businesses offering credit repair services with six states, proving unsatisfactory in terms of bureau records due to unresolved complaints of having taken money and failing to provide the promised services. Information on the other three could not be acquired. Myers explained that none of them had bonds as far as they could tell, referring to a Tennessee law that requires posting a $100,000 bond by credit repair services firms to operate in the state. Scholars Inc., a Memphis company however had posted a $10,000 bond according to a previous law and was therefore allowed to remain registered with that bond amount. However the BBB's list of problematic credit repair services firms did not include Scholars Inc. In the advice of Thomas Lindsey, president of Scholars Inc., credit repair services should only be availed from licensed and bonded companies. But he believes a market for credit repair services does exist. The importance of credit reports is constantly increasing with more transactions and government benefits opting for electronic payment. Many people without bank accounts now require them to avail of these benefits. What your credit report features will affect your ability to get such an account. The consumer advocates feel that you can request verification of any negative information on your credit file, as in the case of credit repair services. While a number of credit repair services that guarantee the removal of negative information including late payments, judgments, and bankruptcies from your credit report even if they are accurate, in reality they can't. Credit repair services con men offer a second quick fix in suggesting an employer identification number (EIN) to create a new credit identity for you, instead of using your Social Security number. The purpose of EIN is for employers' use in filing employees' taxes (withholding and FICA) and not for an individual. Therefore by using this number for a loan application in interstate commerce, you are violating federal law. In general any request for upfront money by a credit repair services agency should be a warning to you. The law requires them to fulfill all the promised services prior to claiming any money from consumers. Thus personal finance experts advise that you should never feel the pressure to pay before seeing results. If a contract has been signed with a credit repair services agency, it can be cancelled within five days without any penalty. Make sure the promised service is in writing with the terms, conditions and guarantees clearly indicated. Therefore, be aware that quick fixes are only a myth. Bankruptcies are doomed to remain on your credit record for 7 to 10 years and any credit repair always takes time. Instead focus on timely bill payments, manage finances well and with time, all the damaging information will be erased from your credit report. |
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