Credit Clean-Up Can Be a Con

  
     
March 13, 2009

With the economy slowing and access to credit becoming less available, many people are looking for fast, easy ways to fix or even erase damage to credit history.

Better Business Bureau is warning that some companies are using the credit crunch to take advantage of consumers who want to clean up their credit.

“Cleaning up your history could get you into bigger trouble if you get taken in,” said Lynda Pasacreta, BBB President and CEO. “Consumers who have poor credit history are looking for a quick credit fix, but in reality there is nothing that can improve your interest rate or help your credit rating overnight.”

In North America, complaints against credit repair companies have risen for three straight years, increasing more than 38% since 2004 according to the Better Business Bureau statistics. Credit repair schemes have come to BC recently as consumer complaints and reports have spiked in late 2008 and 2009.

JPM Accelerated Services, Inc. based in Florida, is a credit repair company which has an F rating, the lowest BBB grade. Consumers in BC have been targeted with aggressive telemarketing calls guaranteeing credit card interest reduction, in one case the company promised to reduce their rate to 6 percent from 28 percent.

 

The company asked for $895 for services up front and additional information to create a "debt profile," which the consumer described as providing information to list all credit cards and personal information. Giving out this information could put the person at risk of ID theft and financial loss.

Mutual Consolidated Savings is another credit repair firm based in Tacoma, Washington which has a C- rating. The company has 88 complaints filed against it, with nearly one-quarter of the complaints from consumers in BC. Mutual Consolidated Savings promises to negotiate lower interest rates on their credit cards. In many cases the business was unsuccessful and consumers felt that the company did not live up to promises made during the sale presentation.

Be aware of the following about credit repair companies:

Ads are not always truthful. Be wary of advertisements promising to "fix" bad credit. Credit repair companies may claim to improve consumers’ poor credit ratings, but, in reality, no credit repairer has the power to change or erase accurate information in a consumer’s file.

 

Watch out for temporary fixes. Credit repair companies may dispute credit reports on your behalf, but that may only temporarily improve your credit rating. Learn what the credit repair company can offer and have them put it in writing prior to giving up your credit card information.

 

Upfront Fees. Watch out for companies that say they’ll "fix" bad credit for a fee — often substantial, usually payable in advance.

 

Removing negative information from your report. So-called credit repair companies say they will arrange to have negative credit information removed from your record — including information about bankruptcies and default judgments. No credit repair company has the authority to have negative information removed from a consumer report unless it is inaccurate, or the rule in the act requires that the information be removed.

 

Prior to working with a company:

 

·         Look at what you can do on your own for free:

§         Reduce your monthly debt payments (excluding mortgage payments) to no more than 15 – 20 percent of your take–home pay.

§         Use your bank account properly – overdrafts and NSFs can signal financial difficulty.

·         Consult with the Credit Counselling Society to see if there are things you can do to help your credit www.nomoredebts.org

·         If you want to use a credit repair service check company's history on www.bbb.org

 

Contact www.phonebusters.com if you think you have been involved in a fraud.