Beware Of So Called Credit Repair Clinics |
|
You must have come across advertisements of credit repair companies claiming that they can fix your credit score or qualify you for a loan or a credit card. The claims made by these companies are very alluring, especially if you've got a bad credit and you need to buy a new car or house urgently. But the truth is that many of their practices are illegal and you should stay far away from such firms. Several credit repair companies have been caught stealing the credit files or Social Security numbers of people under 18 years of age, or of people who have died or live in out-of-the-way places like Guam or the U.S. Virgin Islands, and swapping these with the files of people with poor credit histories. Many other companies have been known for breaking into credit bureau computers
and modifying or deleting a bad credit file. But even if a credit repair company is genuine, don't believe to all its claims upfront. There's hardly anything these companies can do for you that you can't do yourself. But they'll charge you anything between $250 and $5,000 for their services and not necessarily carry out all their services in a perfect manner. The Claims Credit Repair Clinics Make They claim to remove all the incorrect information from your credit report. Now, that is something that you can do yourself under the Fair Credit Reporting Act (FCRA). Everything that a credit repair company can do for you in this regard, you can do on your own. You just need to get in touch with a local credit bureau and ask for a copy of your credit report. You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment and request for the report within 60 days of notice. You can also get a free credit report if you can prove that you're unemployed and plan to look for a job within the next 60 days, or you're on welfare, or your report contains error because of fraud. Otherwise, the credit bureau may charge you a small amount for a copy of your credit report. They claim to remove even correct, but negative, information from your credit report. This is something that they can't do legally. Correct negative entries in your credit file can legally stay there for seven or ten years depending on the type of information. No one can make such entries disappear through any rightful procedure. One tactic of credit repair services is to attempt to derive benefit out of the law requiring credit bureaus to verify information if the customer disputes it. Credit repair clinics simply challenge every item in a credit file with the hope that due to the great number of queries, the credit bureau might just remove the entry without confirming it. But the credit bureaus are also aware of this tactic and often write off these challenges citing them to be frivolous; a right credit bureaus have under the Fair Credit Reporting Act. You'd do yourself good if you get a copy of your file and select the outdated, incorrect, and ambiguous items that need to be challenged. They also claim to get outstanding debt balances and court judgments removed. Credit repair clinics usually advise debtors to pay off all outstanding debts if the creditor agrees to remove the negative information from your credit file. This is a negotiation tactic that you can do on your own without the help of a credit repair clinic. Several states and the federal government control for-profit credit repair clinics, or even bar them from carrying out business. Some fishy credit repair clinics have tried to evade these regulations by setting themselves up as nonprofits, but they still charge hefty amount for their services and deliver poor results. Before signing up with a credit repair clinic that claims to be a nonprofit, carefully go through the details of the agreement, the terms and conditions, the company's fees, and claims of what it can deliver. Most importantly, check out the past performance of the company by calling the Better Business Bureau, or ask for the names of satisfied customers. |
