When hiring a company for repairing bad credit, be very careful.
If you do choose to work with an independent agency in order to improve your credit rating, be extremely careful not to buy into one of the many scams out there.
"Probably the very best thing my earnings
have given me - is absense of worry.
I have not forgotten what it feels like to worry
whether you'll have enough to pay the bills.
Not to have to think about that any more
is the biggest luxury in the world.”
- J.K. Rowling |
There are countless scam organizations, preying on the fear, guilt and shame a person feels when they are in financial trouble. They promise to:
- Erase Bad Credit
- Clean Up Your Credit History
- Create a New Credit Identity
- Erase Bad Debt
- Remove Negative Items From Your Credit Report
All such claims are false, and according to the FTC, these are all scams.
In an effort to educate consumers about their rights, the Federal Trade Commission has introduced a number of tools and laws outlawing such claims and giving consumers legal rights.
These scam organizations charge hundreds, even thousands of dollars and claim that they are capable of repairing bad credit reports so that negative information will no longer appear in the credit history.
The law forbids credit repair organizations from taking money before the services are fully performed. It requires that the credit repair organizations give consumers written disclosures explaining legal rights about credit history, before the signing of a contract.
The law requires organizations to give a written contract with all terms and conditions of payment, description of services, guarantees of performance and estimate of time duration, to the consumer. It also gives consumers a three day period to cancel any agreement they sign with such an organization.
Any contract made between consumer and credit repair organization that does not comply with this law is legally void.
The only organizations that can permanently remove debt from your record are the three national credit bureaus or the individual creditors who originally reported the poor credit.
Credit repair scam companies use clever schemes to make a debt temporarily disappear from a credit file. They dispute all the negative credit information on behalf of the consumer. If creditors do not respond to the disputed item within 30 days, the credit bureau has to remove the disputed item from the credit history, by law. However, this is only temporary.
The creditor will eventually respond and the derogatory information will be placed back on the consumer's credit history again. Remember, there are no quick fixes. Only time can resolve negative or bad credit. Even when you payoff the delinquent account, the record stays for as much as 7 years (10 years for a bankruptcy).
If you are already talking to someone who’s telling you how they are successful at repairing bad credit, read on. Spotting a scam is easy. They will ask you for fees up front. They will advise you to file a dispute on all negative information, even the correct ones.
This is all ethically wrong and a huge red-flag; they will promise you a positive outcome, no one can legally or realistically do that. They will tell you to get a new ID, EIN, or social security number, a felony under federal law.
Repairing bad credit is promised by countless scam artists. Don’t fall for their lies. Instead, create a solid budget, work to save and pay off your debt, and begin living a debt free lifestyle that is more focused on building wealth.
"The man who never has money enough to pay his debts
has too much of something else.”
- James Lendall Basford |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
