Credit Repair Rip-Offs

Credit repair rip-offs are an epidemic. You have seen the ads “Delete negative information from your credit report!” “Increase your credit score by 250 points!” “See results in 60 days or your money back!”

Many “credit repair” companies boldly make such advertising claims. Although some work loopholes of credit reporting and may have some success getting negative information removed from credit reports, others base their sales pitch on promises that are either illegal or undeliverables, while charging steep upfront payments.

The Federal Trade Commission warns consumers to be wary of such offers, advising that “only time, a conscious effort, and a personal debt repayment plan can improve a credit report.”

 

If you’re in the market for a credit repair company, here are some tips to avoid credit repair rip-offs:

•     Accurate information cannot be deleted from a credit report. Any promises to do so should serve as a warning.

•     Federal law prohibits up-front payments for credit repair, and requires you receive a detailed explanation of your legal rights, a written contract, and three days to cancel if working with a for-profit company.

•     Creating a second credit profile under a new Social Security number or employer ID number is illegal. Even if you could create a second profile, you would be committing wire and mail fraud every time you applied for credit using mail or the Internet.

•     Never respond to offers from unsolicited e-mails. Chances are, they’re illegally spamming for business. And don’t call 900 numbers for “free” information. The info may be free, but the phone call isn’t.

Three simple steps to repair your credit the right way

  1. Order Your Credit Report. The only way to solve the problem is to face reality. The credit report is the place to start. The good news is, it is simple and free. See below how to get your free credit report.
  2. Identify The Mistakes On Your Report. It is estimated that 20% of all credit reports have mistakes. Remember that your credit report is your financial history. This is how your creditors/lenders will be evaluating you. I think this is time well invested in your part.
  3. Contact The Credit Bureaus and Creditors. Collect evidence to support your claims. Write to both the credit bureau and the creditor, you need to contact both and make all necessary corrections. Let them know errors, mistakes and missing information. Tell them you dispute an item and share the information you collected.

You don’t need to pay someone to do these three simple steps above.

 

The Best Way to Get Your Credit Report for Free

Federal law requires that the three main credit reporting companies — Equifax, Experian, and TransUnion — provide you with a free copy of their credit report once every 12 months, if requested.

Tip: This is something that it is not mentioned in other places. Order the three reports at the same time. Here is why, the three credit bureaus do not always have the same information. The reason is that creditor decides which bureaus to use. Sometimes some of the creditors do not report at all. The other reason is mistakes that will tank your credit score may not be reported in one of the credit reporting companies; if you don’t review each of the reports, you may not know of the reasons why your score is low or lower than expected.

To order your free report, visit the only authorized source for free annual credit reports under federal law:

www.annualcreditreport.com, or call 1-877-322-8228.

Outside of www.annualcreditreport.com, be wary of websites that offer a “free” credit report, as you may end up getting signed up for a product or service you don’t want. For instance, freecreditreport.com, which is legitimate — it’s affiliated with credit reporting agency Experian — enrolls you in a credit monitoring service that you have to opt out of.

For information, visit www.ftc.gov/freereports.