How to Avoid Credit Repair Scams |
By Kenneth Long on December 1, 2010
.jpg.aspx?width=75&height=75) A sure sign of a scam is a company that promises to repair your credit. No one can remove accurate information from your credit report. It is illegal for credit repair companies to promise specific results. They can only promise their actions.
Advanced fees should be your first clue that you are facing a credit repair scam. It is illegal for any company to charge fees for credit repair before services have been rendered.
Some credit repair companies encourage you to obtain a tax identification number to use instead of your social security number. However, this is illegal. According to Carol Kando-Pineda with the Federal Trade Commission, this illegal advice could impact you if you follow it:
"If the consumer follows illegal advice and they commit fraud, they could be in hot water as well. They could be charged with mail or wire fraud for providing false information."
Credit repair companies cannot make false claims and they cannot charge you before providing services. However, this is frequently the case with many credit repair scams who take your money today and disappear tomorrow. Even scarier, you might be the subject of identity theft if your information is used to obtain new credit.
If you do sign a contract with a credit repair company, make sure that you understand their fee structure. You have a three day cooling off period in which you may cancel the contract.
Of course, you can do what they do for free. You simply dispute all negative information that you believe is inaccurate. The more evidence you have to support your claim, the better. This can be helpful if your online dispute is denied and you must send in a more detailed dispute by mail.
The Fair Credit Reporting Act provides access to a free credit report if you are:
- unemployed
- on welfare
- have been the victim of fraud
- have had adverse action taken against you by a lender in the past 60 days.
The Fair and Accurate Credit Transaction Act provides access to a free credit report from each of the three main credit bureaus once annually. The report is free but scores cost extra.
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