Credit Counseling Over Credit Repair Companies |
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In the past decade, the federal trade
commission has shut down more than 50 credit-repair companies. Steven Baker, a financial expert, says that he's never seen a legitimate credit repair company. An inaccurate credit report is not as dangerous for consumers as fixing credit errors, if the credit repair company that you've hired to do the legwork is not honest. Victims of fraudulent credit-repair companies have seen their already poor credit history suffer additional damage and, in some cases, even faced criminal charges. Regulators often warn that such companies use illegal tactics and charge exorbitant fees. Many of these companies promise to fix bad credit, rather than just correct errors, which is not legally possible. Companies that promise to fix your bad credit rating or erase bad credit are usually nothing more than cheats, out to get your money. In many cases, these outfits take your money, do little or nothing to improve your credit report and then vanish. As a result, many states have laws strictly regulating credit repair companies. So, if you've had a problem with a credit repair company, you need to contact the Attorney General's Office or your local consumer affairs office. You should also contact the FTC. Although the FTC cannot resolve individual credit problems for consumers, it can act against a company if it sees a pattern of possible law violations. So, if you believe a credit repair company has engaged in credit fraud, you need to send your complaints to the FTC to prevent the company from cheating more people. You also have the right to sue a credit repair organization that violates the Credit Repair Organization Act. This law prohibits deceptive practices by credit repair organizations. Under this Act, you've the right to cancel your contract with any credit repair organization for any reason, within 3 business days from the date you signed it. Credit-repair companies often claim unique insight into the dispute process. One of the tactics that they use is to repeatedly contest accurate items hoping the reporting agencies will eventually fail to meet the 30-day requirement for responding. If the credit reporting agency fails to reinvestigate the disputed item within the stipulated period, they must remove it from the report. Another tactic is that these companies will try and establish a new credit history for the consumer through an employee identification number, a nine-digit number usually used by small businesses for tax purposes. This practice, called file segregation, is a felony under federal law, since it creates a false identity. Generally the date used to trigger the passing of time in this context starts with the date of the last activity of the account. Interpretation and misuse of this rule accounts for many reporting errors. Today, a credit record is more than just a parched report on how many credit cards you have and whether you made every auto payment on time. Credit recording agencies often distill consumers' reports into a three-digit number called a credit score--and that number alone can determine whether you get easy monthly payments or loan-shark rates. It's not surprising that as credit scores become more important so the need of credit repair is also increasing day by day. However, credit laws do allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. But you can do this yourself, without the help of a credit repair company. Nevertheless, the concept of hiring an expert is attractive to many consumers. This is because they find the whole process too complicated or just don't have the time to deal directly with the reporting agencies. So, if you can't solve your credit issues by yourself and want additional help, you can contact a credit counseling service instead of going to a credit repair company. Counselors try to negotiate payment plans that are acceptable to you and your creditors. They also can help you work at a new household budget. There are also, nonprofit companies in every state that help people in debt. Nonprofit credit counseling: there is help out there. |
