Credit Repair Services: Its Hidden Dangers |
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Credit repair services and credit improvement firms promise to fix your credit and 'erase' negative items from your credit report. Since, good credit is one of the most valuable 'assets' a consumer can have; it's difficult to qualify for a home mortgage or a car loan without a good credit rating. Therefore, consumers who are desperate to restore their damaged credit rating seek credit repair services.
And there are plenty of credit repair services waiting to help you with your credit repair needs. Some of these credit repair services promise to clear bad credit ratings form the credit report, regardless of whether they are accurate. But this is not possible. But these people who go to credit repair services usually are in dire financial straits and are susceptible to fraudulent businesses, that can't provide the services they promise. There are many so-called credit repair services, clinics, seminars, books, do-it-yourself kits and companies. They claim that they can erase bad credit, remove negative items or fix your credit. But don't be fooled by their slick way of marketing their credit repair services or their claims that they are credit consultants or credit educators. Legitimate credit repair services will write to a credit bureau, asking to have inaccurate or false items corrected or removed. But you can do the same thing, by yourself, for free. The Federal Fair Credit Reporting Act has given the consumers the right to have any inaccurate information on their credit reports corrected. And according to the law, the credit reporting agency is not allowed to charge for correcting any inaccurate information in your file. But a disreputable credit repair services firm may simply take your fee and do nothing to repair your credit. One sure sigh of a disreputable credit repair services is if they ask for they payment in advance, before they've preformed what they promised. In fact, it's illegal for credit repair services to require you to pay before the service is provided. Some credit repair services will look effective, by exploiting the procedures used to verify credit information. For example, suppose your car was repossessed several years ago and this negative item still appears on your credit report today. The credit repair services firm might write to the credit bureau, asking to have the repossession erased. The credit bureau will then have to contact the person or company that repossessed the car, for confirmation. But if the company or individual who repossessed your car is slow to respond, then item may temporarily disappear from your credit report. This makes it look like the credit repair services have been successful. However, the negative mark will reappear on your report as soon as the credit bureau gets confirmation from the company or individual who repossessed your car. This procedure can fool the consumer. But even credit repair services are finding it difficult to do this any more. This is because credit reporting bureaus have begun to use new procedures, to reverify disputed information, such as Automated Verification. This new procedure could make the thirty-day time limit irrelevant. It's possible that in the not too distant future, a credit-reporting agency might be able to verify information in less than 30 minutes! Another strategy used by these credit repair services to appear credible is the "money back guarantee" offers. Unfortunately, many have learnt from experience that there is no guarantee on how long these credit repair services will be in business. Almost all credit repair services firms, when pressed to return the money, will tell you that they need anywhere from 60 days to 6 months or more, to achieve their promised results. That gives them ample time to gather clients, then either close down or leave town. Also, when you agree to their services read the fine print of the contract carefully. So, if they say they can improve your credit that could mean making one simple correction. So, if you have 5 negative marks and they remove one, they have fulfilled their promise to improve your credit. By removing the one negative mark, the credit repair services have improved your credit, though only marginally. And you still have bad credit. Also, many people have found out the hard way that these credit repair services can actually cause additional problems, by reporting unpaid balances by dissatisfied customers as uncollectable accounts. So, if you're considering credit repair services, one way to make sure that you're not cheated is to make sure the business is registered with the Department of Financial Institutions. |
