BEWARE OF CREDIT REPAIR SERVICES
Having a low FICO score and negative information on your credit reports might tempt you to find a quick fix. That's where credit repair services come in, preying on people with bad credit. For a fee of hundreds or even thousands of dollars, they promise the world: "Credit problems? No problem!" "We guarantee to make your bad credit vanish!" We can wipe clean bankruptcies and bad loans from your credit report!"
It's all a lie, according to the FTC. Credit repair services pledge to do the impossible, and they often use illegal strategies to try to clean up your credit. They take a lot of money from you, and you may get nothing in return. Don't go to them. The only things that will improve your credit are time and positive, responsible financial moves on your part.
The FTC says you should watch for these warning signs about credit repair companies: 1. Companies that want you to pay for credit repair services before they provide any services. 2. Companies that do not tell you your legal rights and what you can do, free, for yourself. 3. Companies that tell you not to contact a credit reporting company directly. 4. Companies that suggest that you try to invent a sinew's credit identity-and then get a new credit report by applying for an Employer Identification Number to use instead of your Social Security number. 5. Companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity.
You could end up in jail. Even though a company may be advising you, it's your responsibility to stay within the law. It's a federal crime to lie on a loan or credit application, and you could be charged with mail fraud or wire fraud if you use the mail or telephone to apply for credit under false pretenses.
Companies that make these promises can't legally remove negative information from your report. The only things these companies can do for you are things you can already do for yourself, free (such as disputing an error on your report).
By law, before you sign a contract with a credit repair company, it must give you a copy of a document called "Consumer Credit File Rights Under State and Federal Law." It describes what repair companies can and can't do by law. For example, they can't make false claims about the services they can perform for you, and they can't charge you until they've completed the services they've promised you.
They must also give you a three-day waiting period, during which you can change your mind and back out of any contract you've signed with them. They must give you a written contract that will give you a detailed description of the services they can provide and exactly what these services will cost you. They must also tell you how long it will take for them to get results. If you've used a credit repair company already, and it hasn't delivered what it promised, or if you suspect that it's done something illegal, you should report the company to the office of your state's attorney general. Check the phone book for your local number, or go online to www.naag.org for a list of state attorneys general.