Nowadays, there are a large number of companies offering credit repair services to people with bad credit. If you use credit in any of its different forms, you will have a credit record that, over time, becomes highly powerful… for good or bad. From the credit obtained at a department or retail store, to applications for loans, mortgages or credit cards, everything integrates your credit history.
Hence, creditors and insurance companies will want to obtain your credit score anytime you apply for a new credit in order to verify your worthiness. If you fail to repay any credit obligation satisfactorily over a specified period of time, your credit history will be damaged, decreasing your chances to obtain new credits.
Credit repair services claim to erase your bad credit and even create a new legit credit identity for you. While many companies do help to improve your credit rating with a financial strategy, there are many others waiting to take your money out of your pocket. Most financial experts advise the “do it by yourself” method, which in the long run is the safest and does not cost.
Time, effort, and planning for repaying your debt will improve your credit report, but if you prefer someone else’s help, be aware and carefully research before choosing any company. When a credit repair office offers you something to good to be true, ask your state attorney general’s office or contact the Better Business Bureau.
Other state consumer agencies will also provide you with the information to find out if there are any pending legal investigations against a certain company. Companies offering to clean up your credit report 100% and in a short time, are more likely fraudulent, particularly if you have to pay costly up-front fees.
Take care when a company asks you to pay in advance, recommends disputing all negative information in your credit report, insinuates or affirms that they can help you get a new credit identity, and even promising you the moon. Credit repairs companies affirming that they can remove your records of bad loans, liens, bankruptcies, or judgments, are simply lying.
The national credit bureaus retain your negative information for 7 years and there is no way to clean up or “repair” such information. When it comes to bankruptcy, the term is 10 years. In all cases, negative information may stay recorded for even longer, until the statute of limitations applied on the bad debt runs out.
To help protect consumers against fraud, identity theft, and other scams, credit repair companies are required by law to provide you with a copy of the “Consumer Credit File Rights under State and Federal Law” before you sign a contract. Along with this copy, they must provide a written contract, in which is spelled your rights and obligations, as well as the description of payment terms for services and total, and the description of the services to be performed.
In addition, credit repair companies must include in the contract their name and business address, how long it will take to achieve their promised results, and the guarantees offered, if any. The federal law offers specific consumer protections, stating that no credit repair company can make false claims about their services, or charge the individual before they have completed the promised services.
There is a mandatory 3-day waiting time after your sign the contract in case you want to cancel the contract without paying any fees. However, if you want to continue with the repairing service, the contract must guarantee that companies will not perform any additional service if they do not have your signature on a written contract
Remember that you cannot change your credit identity, so if you apply for credit and provide false information, you are exposing yourself to be charged and prosecuted for fraud. It is a federal crime to make false statements on credit or loans application, to obtain an Employer Identification Numbers from the Internal Revenue Service under false pretenses, or misrepresent your actual Social Security number.
Useful Resources:
Better Business Bureau
Credit Repair: Self Help May Be Best
About the Author: This article was written by Anita Johnston.
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