Protect Yourself From Credit Report Repair Scams |
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Credit
report repair is an especially pernicious fraud that preys on consumers who have run into financial trouble and as a result, have bad credit reports. A consumer depends on his credit record for future purchasing power and eligibility to avail any credit facilities . A good rating, or
score, can ensure a low rate of interest and loans for longer term, and for
various purposes like credit card balances, car or home. On the other hand, a poor rating makes the consumer vulnerable to finance companies charging
exorbitant interest rates and imposing various unnecessary repayment and loan terms. As a result, consumers have a crucial interest in establishing and maintaining their creditworthiness and standing. Therefore, they opt for credit report repair at some point or other. And usually they approach one of the thousands of credit report repair organizations across the country that claims to restore consumers' creditworthiness for a fee. Most credit report repair firms claim that if information on a credit report is not fully accurate, they can challenge it and have it permanently removed from the consumer's credit report. However, this is only limited to those information that is inaccurate. Accurate, negative information stays on a consumer's credit report for seven years. In the case of bankruptcies, it is increased to ten years. It is possible for the credit report repair firms to challenge the accuracy of information on credit reports. But consumers can do this as well, without having to pay or needing the assistance of the credit report repair firm. Some credit report repair agencies advice consumers to use a technique known as file segregation. They advise the consumers to apply for an employer information number (EIN) from the IRS, which has the same number of digits as a social security number, and use it to build fresh credit. What they fail to tell the consumers is that this is a felony. Thus, it is evident that the area of credit report is one of danger and fraud for a consumer, especially one who opts for professional help. Considering the stakes and the consequences involved, it is absolutely imperative that consumers understand the importance of credit report repair. Therefore, to combat these problems, Congress has given law enforcement and the public two key tools to address credit report repair fraud. There is, the Telemarketing Sales Rule (TSR), which became effective on 31st December, 1995. This rule allowed the FTC to coordinate federal-state efforts against telemarketers who promoted credit report repair scams. The FTC, nine state Attorneys General, and the District of Columbia government brought 17 law enforcement actions against 13 credit report repair firms across the country. Many of the actions invoked provisions of the Telemarketing Sales Rule that specifically address credit report repair. Then there is the Credit Repair Organizations Act (CROA), which became effective on March 30, 1997. It ensures that the information necessary to make informed decisions about employing credit report repair firms is available to the public. The CROA is to make sure that the prospective buyers of the services of credit report repair organizations are provided with the information necessary to make an informed decision. It protects the public from unfair or deceptive advertising and business practices used by credit report repair organizations. Under this Act, no organization can make statements or counsel or advice consumers to make any untrue or misleading statements regarding his creditworthiness. This is to protect the consumer from companies that willfully mislead or misinform him. The Credit Repair Organization Act also provides the consumer with legal rights to challenge any disputed items that is exist in his or her credit report. According to CROA, you have the right to dispute inaccurate information in your credit report by directly contacting the credit bureau. However, neither you nor any credit report repair company or credit report repair organization has the right to remove accurate, current, and verifiable information from your credit report. With credit report repair fraud promoters targeting millions of consumers faced with financial burdens, a multi-faceted anti-fraud approach is clearly necessary to make headway in preventing such fraud from continuing. And this is where new legislation, such as the Credit Repair Organizations Act, comes in, providing a further basis for collaborative efforts in fighting consumer finance fraud. |
