How to Avoid Credit Repair Scams

With economic challenges plaguing the country, credit repair companies are getting aggressive in marketing their services. The only problem is that some of the techniques they use are questionable at best and illegal at worst.

Difficulty: Easy

Instructions

Things You'll Need:

• Caution

1. 
    

   If you are thinking about using the services of a credit repair company, you should know that the Federal Trade Commission has rules that these companies must obey.

2. Credit repair companies are not allowed to ask for money up front. If they do, they are breaking the law. The FTC also requires these companies to let you know that you have three days to cancel the services and honor the waiting period.

3. 
    

   According to the FTC, a credit repair company must give you a list of services you will receive for the fee you are being charged, the length of time it will take for results and the company's legal name and business address.

4. Credit repair scammers will advise you to challenge all information on your credit report even if everything is accurate and true. If the credit information is true, there is nothing you can do about it and it stays on the report.

5. 
    

   Some scammers will tell you to apply for an employee identification number so you can use that number to apply for a loan instead of your social security number. This is considered fraud and is illegal.

Tips & Warnings

• Never pay to have your credit repaired. Only time can fix damaged credit.
• You can dispute legitimate errors yourself for free. It may take between 30-45 days for the errors to come off your credit report.
• Legitimate errors can be corrected quickly for a fee. Contact a mortgage broker or lender and ask about rescoring. This only works if you are applying for a first mortgage or refinancing.
• If you still want to work with a credit repair company, do some homework and check out their services through the Better Business Bureau. You can also do an Internet search for comments and reviews.
• Credit repair companies advertise directly to the consumer. Don't fall for their trap.

Resources

• Read - How to improve your credit score

[tongyun]

on 12/17/2008 Since when do you need credentials to be an expert? Don't you know that anyone can be an expert on the Internet? LOL

[FengShuiFairy]

on 11/29/2008 Thanks for the info. I was planning on using a repair company that charges $99.00 up front to get started and $39-$79 per month for their service until you are fixed up. I am going to tackle this myself after reading your article! THANKS!

[tongyun]

on 10/24/2008 Thanks for the comments everyone. I really hate these predatory companies because they are just a waste of time and money.

[listenhere101]

on 10/23/2008 Great article. You have to really watch out for scammers who prey on innocent persons.

[iamageniuster]

on 10/23/2008 Excellent article. 5 stars! Thanks for sharing.