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Offers to repair credit can be scams
These so-called “credit doctors” use -- or should I say abuse -- the system set up by Uncle Sam by which consumers can protest items in their credit histories that they believe are invalid. Under that system, when a credit bureau receives your inquiry, your credit provider is notified and the negative item is removed from your file for a period of 30 days to give the provider a chance to respond. But when the creditor answers back and says the item is correct, it goes right back on your records.
What phony credit-repair companies do is charge people a lot of money to write letters they could write themselves. And then, a month later, the offending marks in your file come back to haunt you.
Another favorite ploy of these scam artists is to obtain a new Social Security number on your behalf, which is patently illegal. Don’t apply for an Employer Identification Number to use instead of a Social Security number, either. That’s illegal as well. If you try to create a new credit identity, you could be subject to prosecution.
“Credit-repair schemes are a big problem for consumers,” says Eileen Harrington, deputy director of the Federal Trade Commission’s Bureau of Consumer Protection, which is leading a federal crackdown on these crooks. “Credit-repair promoters generally charge hundreds of dollars, but don’t deliver on their claims. The fact is, they can’t. No one can legally remove accurate and timely information from your credit report.”
There isn’t anything a credit-repair firm can do for you for a fee that you can’t do for yourself for free. So avoid any company that wants you to pay for such services, especially before they provide them. That too is against the law.
Another tip from the FTC: Stay away from any company that tells you not to contact a credit reporting agency directly or advises you to dispute all the information in your credit file. Only time, a conscious effort and a personal debt-repayment plan can improve your credit report. Your first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected without charge.
The three nationwide credit reporting companies -- Equifax, Experian, and TransUnion -- are required to provide consumers who request them a free copy of their credit reports once every 12 months. To order your free report, visit www.annualcreditreport.com or call 877-322-8228.
Anyone contacted by a company offering to fix their credit for a fee should contact the FTC at www.ftc.gov or by calling 877-FTC-HELP. You can also use these contacts to ask for free information about recognizing credit-repair scams and building a better credit record.
The consumer watchdog agency’s consumer brochure, “Credit Repair: Self-Help May Be Best,” offers advice for consumers looking to go through this process, as well as indicators that a credit-repair offer may be a rip off.
