There are over 3,000 credit repair companies in the United States with each claiming to be better than the others. One of the most important things to know as you embark on fixing or improving your credit is that, there is nothing a credit repair agency can do to fix your credit that you can't do yourself. So you might consider saving your money and repairing your credit yourself.
Only the passage of time, a conscious effort, and a personal debt repayment plan will improve your credit report.
No one can erase accurate negative information from your credit report. Only incorrect information can be removed. Accurate information stays on your record for 7 years from the time it's reported (10 years for bankruptcy). Even information about bills you fell behind on but now are paid will remain on your report for these time periods.
However, If you insist on seeking assistance from a credit repair company, you should know that you are protected under the Federal Credit Repair Organizations Act.
Under federal law, when a company uses telemarketing to sell credit repair services, they have to meet certain requirements before they can charge for their services.
The company must achieve the results it promised you within the time frame they stated.
The company must give you a consumer report showing the results, and the report must be generated more than six months after the results were claimed to have been achieved.
Only then can the company charge you fees or accept your payment.
You see the advertisements on the Internet, in newspapers, and on TV. Their claims are usually in this format:
Credit problems? No problem!
We can erase your bad credit in 30 days!! - 100% guaranteed.
Create a new credit identity - legally.
We can remove bankruptcies, tax-liens, judgments, and bad loans from your credit file forever!
Promises to "fix" your credit report may be tempting, but they are NOT true. Just do yourself and your wallet a favor and don't believe these statements.
Watch out for organizations that charge big upfront fees, make unrealistic promises and lack accreditation credentials.
Before using a local credit counseling service find out if the counselors are certified, how much the services cost and if the agency is accredited. Also, check with your employer, credit union or housing authority for no-cost credit counseling programs.
Just beware of credit repair offers from companies that:
Want you to pay for credit repair services before any services are provided.
Do not tell you your legal rights and what you can do - yourself - for free.
Recommend that you not contact a credit bureau directly or
Advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity.
Promising to remove negative but accurate information from your credit report.
Offering to establish a new credit identity for you, an illegal practice known as “file segregation.”
Encouraging you to stop making payments to your creditors.
Telling you to ignore the IRS, collection letters or other legal documents.
While some credit repair companies are outright frauds, others are not fraudulent and they use the dispute process to obtain impressive results. If you must work with a credit counseling organization, make sure you a working with a reputable nonprofit community-based credit counseling organization that provides one-on-one assistance to help you improve your credit. Lenders, banks insured by the FDIC, and nonprofit organizations can also give you credit repair advice.
No they can't. No credit repair company is so good that it can guarantee a specific outcome. Guarantees are a sure sign of credit repair fraud. As stated above, "The Law states that you have the right to see results before you pay."
By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot:
Make false claims about their services
Charge you until they have completed the promised services
Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Your contract must specify:
The payment terms for services, including their total cost
A detailed description of the services to be performed
How long it will take to achieve the results
Any guarantees they offer
The company's name and business address
Many states have laws strictly regulating credit repair companies. States may be helpful if you've lost money to credit repair scams. If you've had a problem with a credit repair company, don't be embarrassed to report the company. Contact your local Consumer Affairs Office or your State Attorney General (AG). Many AGs have toll-free consumer hotlines. Check with your local directory assistance.
You also may wish to contact the FTC. Although the Commission cannot resolve individual credit problems for consumers, it can act against a company if it sees a pattern of possible law violations. If you believe a company has engaged in credit fraud, send your complaints to:
Correspondence Branch
Federal Trade Commission
Washington, DC 20580
The National Fraud Information Center (NFIC) also accepts consumer complaints. You can reach NFIC at 1-800-876-7060, 9 a.m. - 5:30 p.m. EST, Monday - Friday, or at https://www.fraud.org on the Internet. NFIC is a private, nonprofit organization that operates a consumer assistance phone line to provide services and help in filing complaints. NFIC also forwards appropriate complaints to the FTC for entry on its telemarketing fraud database.
Note: You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
If you have credit problems, get counseling. Your local Consumer Credit Counseling Service (CCCS) can provide advice about how to build a good credit record.
The CCCS may also be able to make payment plans with your creditors if you've fallen behind. These services are offered for free or at a very low cost. To find the nearest CCCS office, call toll-free, 800-388-2227, or go to www.nfcc.org.
