Do You Know How To Spot Credit Repair Scams?

You may see ads on TV, online, or in the newspaper claiming that your bad credit can be quickly and easily fixed. Don’t fall prey to these scam artists.

Avoid companies that tell you truthful information can be changed or erased to improve your credit or that only the credit-repair company can remove old or inaccurate information. These claims are false.

Be wary if you are asked for a large sum of money before the credit-repair company completes the job. A money-back guarantee will not protect you from a disreputable company.

Avoid new credit identities

If you have filed for bankruptcy, you may be the target of a credit-repair scheme, often called "file segregation." Here, you are promised a chance to hide unfavorable credit information by establishing a new credit identity.

However, there is a problem: File segregation is illegal. If you use it, you could face fines or imprisonment.

Other scams

Consumers looking for an easy fix often are targets of other credit-related scams:

Credit by phone: Pay-per-call or 900-number services have become a popular vehicle for credit scams. Advertisements promise that "guaranteed" credit or cash loans are only a phone call away. Instead, the caller might only receive a list of banks offering low-interest credit cards or a booklet on how to establish credit — and a phone charge of $50 or more. Consumers rarely end up getting credit.

Gold or platinum cards: Beware of promotions for gold or platinum cards that promise to get you credit and build your rating. Although they may sound like all-purpose credit cards, some cards only permit you to buy merchandise from special catalogs and will not help you obtain other credit. You also might be asked to call a 900 or 976 exchange number for more information. These phone charges add up quickly.

Checking-account scam: This scam, which tricks you into disclosing your checking-account number, typically begins with a postcard advertising easy credit approval or low-interest credit card rates. When you call, you are asked for your checking-account number as "verification." Your number then can be magnetically encoded on a draft, which is forwarded to your unsuspecting bank for payment from your account.

If you suspect a credit-repair scam, file a consumer complaint with the Attorney General's Office online or by calling the Consumer Protection Hotline at 1-800-392-8222.

Never give out your bank account or credit-card number unless you know the company is reputable. Don’t be a victim of these credit card repair scams.

Do-It-Yourself Credit Repair

Good credit is key to economic success. You may not give to much thought to your credit report, but good credit lets you do a lot of things that most people take for granted: get a credit card, rental a car, obtain a loan, or even get an apartment. Missed payments to a creditor, or defaulting on a loan altogether, creates black marks that are recorded on your credit report when your creditor reports them to a credit bureau. Too many missed payments or defaulted loans will leave you with no option but to start the credit repair process, otherwise, your applications for credit cards or other loans will be turned down consistently until you do.

A quick search in the classified ads or on the internet for credit repair will give you tons of offers from credit repair companies offering a quick fix to your credit problems. Most of these companies have aggressive marketing strategies that promise to fix your credit report fast for a nominal fee. Be very cautious with these companies and deal with them at your own risk –many are not only scams, but also in most cases you can fix your own credit more effectively by doing it yourself.

Remember: there is nothing a credit repair company can do for you that you can't do for yourself. Even though credit repair companies might imply otherwise, they can’t erase poor marks on your credit rating and they have no influence over the credit bureau. Most likely, the credit repair company will probably tell you to obtain a copy your current credit report and to challenge any negative items on it. You can do this yourself without actually paying someone to tell you to do it.

Sometimes, credit repair companies may even recommend that you perform activities that aren’t even legal to "fix" your credit. They might encourage you to begin working on a "new" credit rating by changing your banking information and address. Not only is this procedure illegal, it is usually ineffective. You are better off going through the credit repair process on your own. An online search will yield detailed sites with step-by-step instructions. Again, beware the source. Your best bet is going through a government-affiliate site or one that is put together by a trusted organization.

The best approach to credit repair is to first obtain a copy your credit report from the credit bureau. Examine the report closely, line by line, and make sure to challenge any errors on the report, in writing, to the agency that reported it. Challenge only items that are genuine. If your report is free of errors, you will need to repair your credit in the traditional fashion, usually involving obtaining a secured credit card that you use regularly, making regular payments on the balance. This will slowly improve your credit rating.

Most importantly, be patient and make smart budgeting decisions. Credit repair is not a quick process, and you will find that you are able to pay off your creditors given enough time. By making payments regularly and not defaulting on any loans, your credit score will eventually prove that you are eligible for credit. Although this method of credit repair is not a fast process, it is truly effective. By doing your own credit repair, you will be far more successful than if you were to employ a credit repair company.

Credit Repair Through Debt Consolidation

Although everyone's economic status and situation is particular, almost all of us are in some sort of debt at any given time. This can mean small debts like credit card bills or in-store financing, as well as larger ones like outstanding loans and mortgages. What this means is that almost everyone is dependent on being allowed a certain amount of credit, and without credit many things that you take for granted will become difficult. The key to your credit status at any given time is your credit report that is maintained by a credit bureau. Once you fall into default, or miss payments to your creditors, your credit bureau will receive notice and you will find yourself saddled with a poor credit rating. Effective credit repair involves many different steps, and is particular to each individual's situation. A good solution for most people in terms of credit repair, however, is debt consolidation.

One of the most important things in credit repair is to act quickly. Although your credit rating will become damaged as soon as you begin to miss payments to your creditors, it will get continually worse if you continue to do so. Many people get confused into thinking that credit is either "good" or "bad," and that once they get into trouble with a creditor it's fruitless to try and rectify it. The opposite is true, however, so even if you are in bad standing with creditors, credit repair requires that you pay off your debts as quickly as possible.

The problem, of course, is that you probably don't have the money to pay off the debts, after all, your economic situation probably was the reason for the missed payments in the first place. It is for this reason that debt consolation can be an excellent tool in credit repair. It works by consolidating all of your debts into one loan. In other words, if you have multiple outstanding debts, you take out a loan from one company, use that loan to pay the debts, and then make payments only on that loan.

What debt consolation achieves is some flexibility in situations where your debt is becoming unmanageable. Although you will ultimately owe the same amount of money, you could get a debt consolidation loan over a long term, so that your monthly payments will drop. Most importantly, debt consolidation immediately puts you back on solid footing with your creditors, and ultimately bodes well for credit repair. Things won't be perfect, but your creditors will report that you have cleared up your debts, and so the process of credit repair can begin quickly.

Debt consolidation is an important tool in credit repair because it allows your status with creditors to change very quickly: you go from someone on bad terms with multiple creditors to someone on good terms with a single one. It allows you to stop the damage before things get out of hand, and gives you the breathing room you need to engage in credit repair. In this way intelligent debt consolation is a valuable tool in credit repair.

Credit Repair Through Credit Counseling

Like many other things in life, budgeting is a skill. Some people are better then others at managing their income and keeping in good standing in regards to their debts. Almost all of us have some sort of debt at any given time: a credit card bill, and outstanding loan, or a mortgage. By managing these debts properly, you will maintain a good credit rating which will allow you to continue to receive credit in the future. If you fail to make timely payments towards your loans - or worse, you let them go in default - you will find yourself stuck with a poor credit rating, which will rob you of many economic opportunities. In order engage in credit repair, you must slowly build your credit rating back up again. One thing that can help you do this is to seek the help of a credit counselor.

In general, credit counseling is performed by non-profit agencies, and is not to be confused with for-profit credit repair companies. The latter should be avoided. Credit repair companies have a reputation for being scams, especially those ones who advertise online. Even if it doesn't turn out to be a scam, it's likely that a credit repair company will do nothing that you can't do yourself: they'll direct you to obtain your credit report and challenge all negative items on it, and may even suggest you attempt illegal activities like getting a "new" credit rating thorough a different address.

In contrast, a credit counseling service will only provide advice, and in a context that precludes a profit motive. This is the best and most intelligent way to engage in credit repair. To deny that rebuilding your credit rating will be a long process requiring time and discipline is to do yourself a disservice, and a credit counselor will help you make the long term plans and decisions you need to in order to engage in effective credit repair.

Most good credit counseling organizations will provide you with advice and workshops, as well as educational materials. They will help you learn to both make and stick to a budget, which over the long term will be extremely beneficial to your credit rating. They will also be able to provide you with one-on-one counseling, so you can examine and learn to make good economic decisions based on your particular credit experience.

The problem with credit repair companies - and the reason you should be suspicious of them - is that they propose a quick, one size fits all solution. Anyone who claims they can quickly fix your credit without knowing anything about the situation is not being truthful. A credit councilor can be crucial in providing exactly the kind of particular attention that a credit repair company will avoid.

Most importantly, if you engage in credit repair by using a councilor, your solutions will be more long term, because you will be learning how to manage your budget more effectively, and making permanent changes to your spending habits. This is far preferable to paying a credit repair company that promises a quick solution that is of no educational value to you.

Contacting Creditors To Help With Credit Repair

Having good credit is almost a necessity on today's world. In most cases, credit it essential to owning a car or home, and with the proliferation of online shopping it's hard to be without a credit card. Unfortunately, some people get into trouble with their credit. They miss some minimum payments on their credit card, or let a loan go into default. When this happens the creditor will report it a credit reporting agency, who will add it to your credit history. Once your credit history is blemished, it can be difficult to repair: most things will stay on your credit history for 7 years before they are removed.

Once you're in a situation where you have a bad credit history, you'll find yourself dealing with many previously unknown problems: you won't be able to rent cars or purchase things online; landlords will hesitate to rent property to you; a mortgage may be difficult or impossible to get. This is why it's important to engage in credit repair as soon as possible: you can do wonders for your credit repair by taking proactive an early action.

One of the best things you can do if you've fallen behind on payments is to contact your creditor. Many people, alas, take the opposite approach: they feel a sense of embarrassment or shame and avoid calls and contact with their creditors. This type of behavior is shortsighted and will result in long term credit difficulty.

The best thing you can do in terms of credit repair is to contact your creditor as soon as you run into trouble with a debt. Remember that the key to credit repair lies in your credit history report, and the report depends on whether or not your creditor reports you to the credit reporting agency. In most cases your creditor will be open to discussing alternate payment plans and solutions. Keep in mind that it is not in the creditor's interest to push you away, as that could mean they get no payment at all. Instead, the creditor is likely to be open to discussing terms.

For these reasons you should always contact your creditor to ensure faster credit repair. Once you contact them, propose a payment system that is realistic both for you and the creditor. It is absolutely essential that you propose a payment plan you can stick to, and that you stick to it. The absolute worst thing you can do is default on these payments - if you do so it will seem like you were simply stalling to avoid payment from the creditor's points of view.

In general, when contacting your creditors in regards to outstanding debts, remember that their decision as to whether to report your non-payment to the credit report agency will affect you greatly, and it is in your interest to do everything in your power to convince the creditor not to do this. By contacting your creditor early and proposing a realistic payment system, you take one of the most effective steps possible towards credit repair.

Be Cautious When Considering A Credit Repair Company

Most people have some sort of debt. Almost everyone has a credit card balance, an outstanding student loan, or mortgage and car payments. All these loans and their payments result in a credit history, which most people don't usually give too much thought too until it's too late. Your credit history can have a major influence on your life, and once you credit history becomes poor you will find yourself unable to rent cars, obtain services without deposits, or get a credit card. This is why, if you find yourself in this situation, it is important that you take steps towards credit repair as soon as possible.

Many people will find their poor credit history to be overwhelming, and will be tempted by one of the many companies online that offer to "fix bad credit" for a fee. Although there are some situations where these companies may of use, for most people they are not necessary, and should be avoided.

The reason credit repair companies aren't useful for most people are because they rarely do anything that you can't do yourself. These companies will give the impression that they are doing things you wouldn't normally be able to do on your behalf, but it most cases they are not.

The general strategy of many of these companies will be to have you first request your credit report from the credit reporting agency, and then to launch numerous challenges to the report in writing. The idea here is not that there are necessarily many (or any) mistakes on your credit report, rather you are trying to take advantage of a legal obligation on the part of the credit reporting agency: namely, that all requests for investigations must be responded to in 30 days. If the agency doesn't respond to you in that time (and it's unlikely they will if you challenge multiple items) they must remove the item in question from your credit report.

While this may initially seem like a clever strategy, it's important to understand that there is nothing to prevent the credit reporting agency from putting the removed items back onto your credit report once they find the proper documentation. In other words: they may not be able to produce the documentation in 30 days and have to remove something, but they will keep investigating, and once they find the documentation the item will be restored to your credit report.

Besides the somewhat dubious strategy that most credit repair companies employ, you should also be careful to avoid any scams. Be advised that these companies are legally bound to render all promised services before accepting any payment from you. They are also obligated to clearly outline all fees and services that will be provided. If you do decide to use the services of a credit repair company, make sure you look over all the paperwork and fine print provided.

In most cases for most people, a credit repair company shouldn't be necessary. The only time you should use one is if they are truly able to perform services you can't do, or don't have time to do, on your own.