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Using Credit Repair Services Dangerous? |
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People with poor credit histories, especially those with recent bankruptcies often fall prey to illegal and false claims made by credit repair companies offering credit repair services that they can legitimately erase bad credit, remove bankruptcies, judgments, and liens, and create a new credit identity for you. They charge fees for legal steps that you can easily do yourself. Before using credit repair services you must think twice. These services advertise in newspapers, on TV, radio or on the Internet with claims that they can erase bad credit-100% guaranteed and create a new credit identity, legally. They also claim that they can remove bankruptcies, judgments, liens, and bad loans from your credit file forever. You should not believe these claims. Remember that only time, a conscious effort, and a personal debt repayment plan will improve your credit report. A Word Of Caution Be careful of credit repair services that offer to fix bad credit. What you need to do is to change the way you deal with credit. If your bad credit is due to an error, do not use credit repair services to fix it, as you can do it yourself and for free. You should also know that if you dispute an item contained in a free annual consumer credit report made available under the FACT Act, you cannot dispute an error directly with a furnisher (a provider of information to a consumer credit reporting agency) by using credit repair services. Credit Repair Services: Some Realities It is important to know that negative, accurate information cannot be erased by any credit repair company offering credit repair services, nor can they improve your credit report. It is only by making a conscious effort to pay off your debts that you can rebuild your credit record. Moreover, you can do yourself anything that the credit repair agency can do for you legally. You can legally dispute--free of charge--any credit report information that is incorrect or incomplete. The modus operandi of illegal credit repair Fraudulent credit repair companies operate by instructing you in how to establish a new employee identification number (EIN) and then telling you to use this number instead of your Social Security number to apply for new credit. Employee identification numbers are used by legitimate businesses to report financial information to the IRS and the Social Security Administration. The companies first ask the consumers to apply to the IRS for an EIN by establishing a new mailing address, phone number, and a few credit references. The companies charge fees for this service and this may range from a few hundred to a few thousand dollars. The Credit Repair Organizations Act The companies offering credit repair services are prohibited by the Credit Repair Organizations Act from providing false claims regarding credit repair and are restrained from charging any fees until services are carried out. They are also duty bound to give you a copy of the Consumer Credit File Rights Under State and Federal Law before you sign a contract. A written contract that spells out your rights and obligations must also be given to you. There are other specific protections for you such as: a credit repair company offering credit repair services cannot make false claims about their services, charge you until they have completed the promised services or perform any services until they have your signature on a written contract and have completed a three-day waiting period. During the waiting period you have the right to cancel the contract without paying any fees. The following must be specified in your contract: the payment terms for services, including their total cost, a detailed description of the credit repair services to be performed, how long it will take to achieve the results, any guarantees they offer and the company's name and business address. Think carefully and take the right decision about credit repair services. |
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