Credit Repair Companies – Scam Avoidance Tips
The issue you should first look out for when you’re looking for reputable credit repair services is the affiliations of the organization you chose for this purpose. All established and reputable agencies will be glad to provide you with their references on request. These are some important issues you should check out as protection against deceitful credit repair companies.
1. Check to see that the company is a member of the Ethical Credit Repair Alliance (ECRA) or another reputable regulatory body. You will often hear it advised to hire companies who are members of the BBB (Better Business Bureau) But when evaluating. those agencies that are members of the ECRA are some of the best.
This body accepts only those members who agree to a stringent code of ethics and any member organization will represent your best interest. All credit repair companies that find approval under the ECRA will be held to high ethical standards in dealing with their clients. This helps to protect you, the consumer from being scammed by a dishonest company.
2. Know what credit repair is before seeking help. Most of those who end up being cheated while they are seeking ways out of a financial jam, have no prior knowledge of what credit repair is all about. It’s important to know what credit repair services can do for you and what they cannot.
Only when you have this knowledge, can you distinguish which agencies can be trusted. For instance, derogatory accounts on your credit report cannot be removed if the credit bureaus verify their accuracy. You will find many such credit repair companies telling you that they can give you a clean credit report within a month or less. Now think for a moment; is this legally possible? If the answer is negative you had best pass on their services.
3. Avoid unsolicited offers you receive through email. When you get an e-mail offer to repair your credit, at the very time when you most need help, don’t fall prey to the belief that divine intervention is somehow involved. These are from scammers who use unethical means to gather e-mail addresses, and send out e-mails by the millions in the hope that they will “catch” a person desperate for help whom they can milk dry!
Never be fooled by such shenanigans. In the vast majority of cases these are crooked agencies trying to take advantage of people’s desperation for their own profit. Honest credit companies will send their offers through various media only after you have indicated you’re interested in receiving them.
4. You cannot legally create a second credit report or a “new identity.” People are far too eager to believe in this fallacy, the reason being that it looks like the “magic solution” to all their difficulties. This is so easily believed because, again, most people do not understand credit repair. This illegal practice is called “File segregation” and will get you in deep trouble with the law!
Your credit score reflects your entire history of financial behavior. Thus, it’s just not possible to get a “new” credit history. So doesn’t it seem logical that any attempt to do that must be illegal? Therefore it’s crystal clear that the credit repair companies that offer this “solution” are not legitimate.
5. If a company asks for complete payment before any services have been rendered, beware! Under Federal Law the company provide you a written contract upfront and that they cannot charge you a fee prior to completion of the services offered. You also have a right, by law, to cancel the contract within three days time.
A credit repair business can ask for an upfront charge for initial services, such as a credit report analysis, and then charge a fee every month as they follow up with the credit bureaus on a continuing basis. But if an agency insist on full payment upfront, it may be because they are aware you will not be inclined to pay later when you discover that their claims have been exaggerated. Companies such as these are ripoffs and you should avoid them like the plague!
6. Repairing your credit score and credit report takes time. As explained, no trustworthy credit repair business can solve your credit problems in the blink of an eye or delete derogatory accounts from your credit report if it is verifiable.
In a best case scenario, less serious issues can be fixed within two or three months, by getting erroneous information deleted, and through timely payments on your loans. More serious problems like foreclosures and the like stay on your credit report for 7 years, notwithstanding the best management of your finances. It will be 10 years before bankruptcies can be deleted. Any company that guarantees quick removal of such items is not to be trusted.
7. No contract? Forget it! If you aren’t offered a contract look for another company; this is your rights under the law. Fraudulent companies will shy away from offering you such a contract, and if they do there will be information missing on various aspects of the services to be provided, the fees charged, and the like. You will be able to understand the nature of these companies by reading their contract. And if there is no contract.
8. If anything is guaranteed, beware! Not even the most experienced organization will make guarantees in regard to results of their credit repair services. After looking at your credit report, they can promise to use all legal means to affect improvement in your score. However, in the credit repair business there can never be any hard core guarantees in regard to results.
Unfortunately human nature being what is, people prefer to hire a organization when they are told what they want to hear, instead of hiring an agency that is truthful. Avoid this all too common self deception! Although you might rather hear promises of positive results, credit repair companies that offer guaranteed results are fraudulent.
9. Look for counseling services. A good many credit repair companies provide them.
If the company that you are considering to engage does not, look a bit beyond. It may be a less than trustworthy company. Reputable companies will educate their clients about repairing credit. Their services are for those matters that need continued and persistent follow-up to clean up all derogatory errors on the credit report.
10. If you’re given wrong advice, look out! There are those businesses that encourage you to dispute all the negative entries on your credit report by claiming “this is not my account..” Even though in the short term the credit score may improve, the creditors whose loans have been disputed may later counter it, and it will later be verified by the bureaus.
Given the fact that the record-keeping habits of the credit bureaus is appallingly poor, the probability is very high that the details of any account have inaccuracies. But credit repair companies that tell you to state “this account is not mine” even if it is, are not trustworthy.
As you can see, there are plenty of red flags along the way to warn against possible fraud. The first thing you must do when you seek to hire credit repair companies is to do your “homework” and learn about credit repair, what it is, what to expect, and what to avoid. Also learn about laws regarding credit repair and credit repair organizations prior to seeking help with your credit. For starters visit the web sites of the FTC Bureau of Consumer Protection and the Ethical Credit Repair Alliance.
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