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Avoiding Credit Repair Scams

22 Comments · Bad Credit

With foreclosures and credit delinquencies mounting, more and more people are suffering damaged credit.

Even if they manage to avert losing their home, the mere fact of an initial foreclosure filing or missing mortgage payments can do serious damage to one’s credit rating, making it difficult or impossible for one to get the financing needed to buy another home, replace an old car or a worn-out major appliance, operate a small business, pay medical bills or meet other necessary expenses.

Credit repair scams often promise that they can get negative information deleted from your credit report for a fee.

The problem is, that’s illegal, no one can get accurate, negative information removed from a credit report.

It’s also illegal for them to charge for their services in advance, under the Credit Repair Organizations Act, which requires that any credit repair services be completed before payment is made.

Information must be inaccurate to be removed
There are companies that will offer to advise you on improving your credit and will assist you in identifying inaccurate information on your credit report and getting it removed, which can improve your score.

But the key here is the information has to be inaccurate to be removed and getting inaccurate information deleted from your report is something that you can do on your own.

One of the tricks scammers sometimes use is that they will contest an accurate piece of negative information, say a missed payment, which is then withdrawn from the report while the credit reporting company investigates.

If the victim then checks their credit report, they may see the item is no longer there and think the scammers have delivered.

But the negative item goes right back on the report once the agency verifies it, and the victim is no better off and a good bit poorer as well.

Some of the tactics promoted by illegitimate credit repair companies can get you into legal trouble as well.

For example, they may suggest you invent a new identity based on an Employer Identification Number in order to generate a new credit report.

But misrepresenting your identity on a loan or credit application is a federal crime, as is obtaining an Employer Identification Number under false pretenses.

Warning signs of a credit repair scam
The Federal Trade Commission offers a fact sheet on credit repair and credit repair scams for consumers.

It offers a number of “red flags” that should signal to consumers that a credit repair scam is likely in the works. Among them:

- They want you to pay in advance. As noted above, it is illegal for credit repair companies to demand payment until services have been completed.

- They urge you not to contact any of the three major credit reporting firms yourself.

- They promise they can eliminate negative information from your credit report, even if the information is correct.

- They advise you to dispute accurate information on your credit report.

Correcting your credit repot yourself
As noted above, you can review your credit report and demand that inaccurate or outdated information be removed by yourself.

You are entitled by law to a free copy of your credit report annually from each of the three credit reporting agencies – Equifax, Experion and Transunion – who collectively sponsor a web site, www.annualcreditreport.com, specifically for the purpose of enabling consumers to request their reports.

When you receive your reports, review them and note any inaccuracies.

To have inaccurate items removed, you need to write to the credit reporting agency issuing the report, note the inaccuracy and ask that it be removed.

If it involves a bill you have paid or a disputed bill, be sure to explain the circumstances and provide any documentation you may have to back up your claim.

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