Credit Repair Scams: Traps to Avoid
Credit report repair is big business and credit repair scams are everywhere. If you want to know more about improving your credit score, and don’t want to bother with disputes or inaccuracies you could consider consulting an independent credit repair company.
But how do you spot the genuine companies? You can do this by following the provisions in the Credit Repair Organizations Act. Know these signs of scammers and frauds.
1. Make sure you look at different companies to get an idea of the way they all do business. In general as well as for this industry, it is better to avoid marketers contacting you directly by mail or phone. Until you see other companies, do not sign anything, even if you are meeting them and are under pressure.
2. If a company asks you for money at the beginning, avoid it. You should not have to pay them before they perform their services.
3. Don’t select a company that promises or guarantees the results you’ll get - for example, if they promise you an increase of 100 points on your credit score. They can only advertise the average scores from other clients, but this isn’t a promise that yours will be that good because they cannot control the outcome. They cannot even accurately estimate your credit score before they eye your report and acknowledge your conditions.
4. You have the right to repair your own credit, and they must inform you of that. Unless you want to, you do not need to hire anybody. You should be suspicious if this isn’t mentioned on their written information.
5. Never enter a contract that the company will not let you cancel. You want a contract that lets you cancel whenever you want. Then, you’d pay for all the work they had already done, but nothing beyond that.
6. File segregation is something that you should avoid from any company. File segregation, which is illegal, involves making you a new credit identity.
If the credit repair company tries to talk you into file segregation, please remember that if they get caught, you get caught also. Your participation as a client is unlawful too. If one unhappy client reports them, all of their files will be examined, and it could result in trouble for their other clients… This would mean trouble for you, too.
Most people who have filed bankruptcy will most often receive letters from companies promising they can solve all their credit problems. You will be told that it’s legal, but after your new credit file is opened, anytime you apply for credit you will have to lie on the application forms. If you decide to give false information to obtain credit it is considered fraud. There are severe penalties, including monetary penalties and even prison time.
With some research you can find legitimate companies willing to help you improve your credit score. The common credit repair scams are easy to avoid if you only know these principles.
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