Credit repair service scams are everywhere these days, preying on people who are in a financial rut. The real truth? Even a great credit repair service can’t do anything you can’t do for yourself. Sometimes, they just make the process easier by guiding you through it and doing lots of the hefty paperwork yourself.
If you’re in a credit crunch and really need some help, a service can be good for you. This is particularly true if you’ve never ordered a credit report or disputed errors on your reports before.
But before you jump into a credit repair service that promises you a clean credit report, make sure you’re not about to get scammed. Here’s how:
First, understand what’s legal. Credit repair services make all sorts of claims about things that are actually illegal. They might, for instance, say they can create a whole new credit history for you. They might also claim to be able to get rid of judgments, liens, bankruptcies, and other problems from your credit report.
Neither of these things is legal. Your credit history is your credit history. If you’ve made mistakes, you can fix them going forward, but you can’t erase the past! Also, things like liens and bankruptcies, as long as they’re listed correctly, stay on your credit report for a certain amount of time before they’re automatically taken off.
Now, with that said, sometimes these problems stick to your report for longer than they should because of credit reporting mistakes. In this case, it’s totally legal to dispute the claim so you can legally erase such matters from your credit report. Just make sure you understand what the laws are so you know the credit repair company is making legal claims.
Not sure what the laws actually are? A good credit repair company will be able to tell you exactly how long a lien or judgment should stay on your report!
Second, make sure you never pay up front for these services. Through the Credit Repair Organizations Act, you’re legally allowed three days after the services have been delivered to pay for them. That way, if the company did absolutely nothing for you, you don’t have to pay.
Really, almost any service that’s asking for up-front payment is probably going to end up scamming you in some way.
Along these lines, you also need to make sure you know what the services are going to cost. You should see a full disclosure of costs up front, and if anything changes during the process, you should sign off on it. If a company tries to charge you a few dollars or a few hundred dollars more than you originally agreed, you’re getting scammed, as well.
Finally, make sure you know your rights and don’t sign them away. Never, ever sign a form that waives your rights under the CROA – the Credit Repair Organizations Act. Some scams will try to get around these rights by having you sign such a form. If they’re trying to get around the CROA, though, they’re probably going to do something you’ll regret.
Something to keep in mind when choosing a credit repair service is that if they do something illegal for you, you’ll be held responsible for the consequences. Use your common sense, and if you aren’t sure about something, call the credit reporting agency yourself.
You can also check out your State Attorney General’s website or hotline if you have questions. Most states have strict laws governing how credit repair agencies work and what they can do. One other resource to check out is the National Fraud Information Center (NCIF) at www.fraud.com. This service is a nonprofit that can help you file complaints and spot a scam if you just aren’t sure.
When it doubt, move on to a credit repair agency that makes you feel confident and comfortable! There are many frauds out there, but there are also some great, legitimate companies that will truly offer you much-needed assistance and advice.
Daniela Baker is a social media advocate at the consumer credit card comparison website, CreditDonkey. She recommends you call your credit card company directly to ask for assistance and recommendations.