All too often, we see or hear ads about credit repair. Most of them are along the lines of, "Bad or no credit? No Problem!" or "We can eliminate traces of bad credit… legally" or how about, "We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!" Yes, we've all heard these claims before. The question is, is there truth to any of those claims?
The short answer is don't hold your breath. Remember, when a claim seems too good to be true, it probably is. Companies that promise that they can clean up your bad credit "just like that" are most likely scam artists who wish to take advantage of people in debt. According to the Federal Trade Commission (FTC), lawyers at the consumer protection agency state that they haven't encountered a credit repair operation with those claims that aren't scams. The truth is, there's no easy way out of bad credit. Repairing or rebuilding your credit is a process that's going to take time and effort.
Spotting Credit Repair Scams
Consumers in debt who need yet another loan are the primary targets of credit repair scammers. They'll advertise that for a certain fee, they can clean up a consumer's credit report so that he or she can get that home mortgage, car financing, or even impress an prospective employer. Be very wary of these scams. The tactics that shady credit repair companies implement are illegal because no one has the right alter accurate information on a credit report. Moreover, if you sign up with their services and let them tamper with your credit report, you can be charged with fraud. Bear in mind that it's a federal crime to misrepresent your SSN, to lie on a credit application, or to obtain an Employer Identification Number from the IRS under false pretenses.
Fortunately, credit repair scams can be spotted from a mile away. One of the immediate red flags is when the company tells you that you need to pay them before they can provide services. This violates the Credit Repair Organizations Act, because the said act states that credit repair companies are not allowed to charge you before they have completed the services they promised. Other signs of shady tactics include recommendations that you don't contact the three national credit reporting companies directly, claims that they can eliminate current negative information from your report, recommendations that you dispute accurate information on your credit report, and more.
What You Can Do About Credit Repair
While only time itself can totally eliminate negative claims from your credit report, there are some legal things that you can do monitor or investigate your credit. The Fair Credit Reporting Act (FCRA) gives consumers certain rights when it comes to handling their credit report.
For one, you have the right to a free credit report if a company takes "adverse action" action you such as denying your application for a loan, employment, or insurance. When notice of the action is receive, you must ask for your report within 60 days of receiving the notice. Furthermore, if you're unemployed and you intend to look for work within 60 days, you're entitled to one free credit report a year. Other situations that entitle you to a free credit report a year include inaccuracies due to fraud and if you're on welfare.
The three nationwide consumer reporting companies (Equifax, Experian, and TransUnion) are required to give you a free copy of your credit report once a year, if you ask for it. They have a central website at annualcreditreport.com and a toll-free phone number that can be reached at 1-877-322-8228. If you wish to obtain your free report, you can send an Annual Credit Report Request Form and mail it to Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281
How to Dispute Credit Charges
Disputing negative or outdated charges on your credit report comes to little or no charge for consumers. The FCRA states that both the consumer reporting company and the information provider (the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting incomplete or inaccurate data on your credit report. If you notice inaccuracies on your credit report, be sure to exercise your rights as a consumer and contact the consumer reporting company as well as the information provider. Be sure to communicate in writing, what information you think is inaccurate, and send copies of supporting documents. Also send your letter using certified mail, "return receipt requested" to ensure that they received it. Finally, always keep orginals and copies of important documents for your records.
The Credit Repair Organizations Act
The Credit Repair Organizations Act is Title IV of The Consumer Credit Protection Act. While it is not officially an "act", section 401 states that you it can be referred to as such. The purpose of the Credit Repair Organizations Act is to protect consumers from unfair and false advertising and shady business practices of credit repair companies.
It also ensures that consumers are provided with accurate and necessary information to help them make informed decisions. It is an official document and it was signed by the President on September 30, 1996.