Home > Credit Repair > What's So Perilous About Credit Repair Companies?
What's So Perilous About Credit Repair Companies? |
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The media, both electronic and print, is
bombarding the consumer these days with ads for credit repair. But you can
afford to believe them blindly only at your own peril. Credit repair is a booming business now and, unfortunately, a lot of unscrupulous elements are
thriving in the market. The consumer with a poor credit history is especially vulnerable to their scheming tactics. People who have recently filed for bankruptcy and find it difficult to get any credit or loan are also at risk. They make tall, sometimes even illegal, claims that are not realizable. They claim to be able to give you an altogether new credit identity, which is not legitimately feasible. There is no quick fix for erasing bad credit. The credit companies mislead the consumer by telling them that they can remove bankruptcies, judgments, and liens et al from their credit report. These credit repair claims are bombastic to say the least. There are no magical shortcuts to credit repair improvement, as most of these companies would have you believe. And it is next to impossible to erase any accurate and current information from your credit report. The only sure and steady way to credit improvement is by paying all your bills on time. It is actually a better idea to do your credit repair on your own, rather than pay all those precious dollars to a credit repair company to do it. You can do everything yourself that a credit repair company can do for you. The law entitles you to dispute any information in your credit report that you feel is inaccurate or obsolete. The credit repair companies are known to resort to illegal means for credit repair. And they usually keep the consumer in the dark about the illegitimacy of the means they might be employing. For example, it is a Federal crime to procure an EIN (Employer Identification number) from the IRS by making false representations. So is deliberately misrepresenting your Social Security Number and making deceitful statements on your credit or loan application. And providing false information through e-mail or telephone call is deemed mail or wire fraud. These are some of the illegal practices employed by the credit repair companies. Some credit repair companies fraudulently advise their clients to apply for an Employee Identification Number from the IRS. The EIN numbers are issued by the IRS and the Social Security Administration to legitimate businesses so that they can report financial information to these organizations. The credit repair companies try to trick bureaus by getting the consumer to assume a new credit identity. This includes getting a new mailing address, phone number, and a few credit references. The company then tries to get the consumer to apply for a new credit by using the EIN number thus acquired. They thus try to substitute the old credit based on your social security with the new one. This is an illegitimate practice and you might have to pay the credit repair company anything up to a few thousand dollars for this service. It's important to distinguish these mercenary credit repair companies from the non-profit credit counseling services. These companies make claims, like instantly erasing your bad credit, which they cannot possibly realize. It is not legally possible to remove any current and accurate negative information from your credit report. Thankfully, the Credit Repair Organizations Act forbids the organizations from making any false claims and they can be penalized under the act. It is also illegal for the companies to charge any fees until after the services are completed. It is also mandatory for them to inform the consumers of their legal rights in a written contract. The information to be included here pertains to the services rendered, the overall time period of the services, the various terms and conditions, and the total cost. A mention also has to be made of the provision whereby you can cancel the service within three days. It is important to arm yourself with knowledge of the relevant laws. |
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