Credit Repair Agencies

Following on from Credit Repair Agencies PART1

If you have been suckered in and do follow illegal advice to commit fraud, you will find yourself in major legal difficulties. It is a federal crime to lie on a loan/credit application, to misrepresent your Social Security number, and most seriously, to obtain an Employer Identification Number from the Internal Revenue Service under false pretences.

You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.

So what is the answer – do legitimate Credit Repair Companies exist?

The answer is a very reluctant yes, legitimate credit repair agencies do exist but given the relative ease of correcting your own mistakes in your credit file, their effectiveness and value is questionable.

Consumers can already dispute mistakes in their credit files for free. But it will take time – applying for your credit reports, reviewing and highlighting errors, documenting the mistake, typing up your letter and mailing it. Several hours at a guess – but worth it for saving hundreds of dollars.

The typical service offered by a Credit repair services is to do this legwork for a sizeable fee. They will obtain a copy of your credit reports, review them for errors and send out dispute letters along with documentation, all things you can do yourself. Yes – they save you some time but the fee spent would negate this and then some. Erasing bad credit – forget it.

The most important thing to remember is that these repair services don’t have any secret methods for erasing bad credit. They don’t have the right to remove accurate and current information from your credit report however bad. FACT – Credit repair services can’t do anything for you that you can’t do for yourself. For free.

So, the task of trawling through your credit history is proving to be a job too far, how do you find a reputable Credit Repair Agency?

Like most things in life, it pays to do your homework. Go online and research the company before you contact them. Speak to the Better Business Bureau to see if there is a history of consumer complaints. Verify with your state’s consumer agencies and States Attorney Generals Office to find out if there are any pending legal investigations. Don’t however rely on chambers of commerce or other trade associations where membership is based solely on a fee as their opinion might not be neutral.

Finally take time to know your rights. Credit repair services must follow specific guidelines from the Credit Repair Organizations Act, intended to protect consumers from these very types of scams. You should receive an explanation of these rights before signing a written contract. Read them and be sure you are happy. If there is a request for cash up front – RUN.

If you do proceed you should receive a contract with all of the following information:

• The payment terms for services, including their total cost
• A detailed description of the services to be performed
• How long it will take to achieve the results
• Any guarantees they offer
• The company’s name and business address

Ensure they have offered a grace period. The credit repair company cannot perform any service for you until you’ve signed a written contract and completed a three-day waiting period. You may cancel the contract without paying any fees during this period.

As a footnote it is worth mentioning that the FTC cites “Credit protection and credit repair” scams as one of the top consumer complaints reported. The actual losses to consumers by these scams are difficult to calculate because many people are too embarrassed to complain but estimates put the losses easily in the millions.

Filed under: Credit Repair Agencies

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