Industry Tips
Credit Repair
Credit Repair
Everyday, companies target people who have poor credit
histories with promises to clean up their credit reports so they can get
a car loan, a home mortgage, insurance, or even a job – after paying a
fee for the service. The truth is that no one can remove accurate negative information from your credit report. It's illegal.
What You Need to Know
When negative information in your report is accurate, only the
passage of time can assure that it will be removed. A consumer
reporting company can report most accurate negative information for
seven years and can report bankruptcy information for 10 years.
If you get an offer to repair or fix your credit, how can you know
if it’s legit? Here are some signs that should set off alarms in your
head – and make you put the offer in the trash:
The company wants you to pay for credit repair services before they provide any services.
Fact: Under the Credit Repair
Organizations Act, credit repair companies cannot require you to pay
until they have completed the credit repair services they promised.
The company doesn’t tell you your rights and what you can do for yourself for free.
Fact: The law allows you to
ask for an investigation of information in your file that you dispute as
inaccurate or incomplete. This investigation doesn’t cost any money.
The company recommends that you don’t contact any of the
three major national consumer reporting companies (Equifax, Experian,
and TransUnion) directly.
Fact: Under the Fair Credit
Reporting Act (FCRA), the consumer reporting company and the information
provider (the person, company, or organization that provides
information about you to the consumer reporting company) must correct
inaccurate or incomplete information in your report. To take advantage
of all your rights under the FCRA, contact the consumer reporting
company and the information provider in writing.
The company tells you they can get rid of most or all the
negative credit information in your credit report, even if the
information is accurate and current.
Fact: Any credit repair
company that claims to be able to legally remove accurate and timely
information from your credit report is lying. There’s no easy fix for
bad credit. Improving your credit takes time and a conscious effort to
pay your debts.
The company suggests that you apply for an Employer
Identification Number to use instead of your Social Security number so
you can invent a “new” credit identity – and then, a new credit report.
Fact: If you follow illegal
advice like this, you may find yourself in hot water. It’s a federal
crime to lie on a loan or credit application, to misrepresent your
Social Security number, or to get an Employer Identification Number from
the Internal Revenue Service under false pretenses. You could be
charged and prosecuted for mail or wire fraud if you use the mail,
telephone, or Internet to apply for credit and provide false
information.
The FTC at Work
The FTC acts aggressively against “credit repair” scams, which are
marketed as quick and easy ways to rid individual credit reports of
negative information. In the last 10 years, the Commission has brought
more than 40 cases against con artists that allegedly lied about their
credit-related services. In one recent case, the FTC charged Bad Credit
B Gone, LLC, with violating federal laws by claiming it could improve
most consumers’ credit reports by removing negative information that was
accurate and not obsolete. The court ordered the company to pay more
than $322,000 in equitable monetary relief.
