Credit Repair Scams

You've watched the ads on television, "Erase bad debt!" or "Remove negative entries from your credit report!" If you're suffering from a poor credit rating, those advertisements may seem like the answer to a prayer.

People get taken in every hour by these credit repair companies. Don't waste your money; those programs don't work, and you'll pay hefty fees to those companies, only to end up right where you started, or worse. Sometimes, the advertised credit repair program may actually be an attempt to steal your identity by gaining information about your social security number, bank accounts, and credit cards.

Here's how the credit repair scam generally works:

First, the company contacts the three credit bureaus and tells them that the negative information contained in your files is false. Because the credit reporting agency wants to accurately reflect your credit information, the credit bureaus temporarily remove the negative information while they investigate the claims. Meanwhile, the scammer sends you a copy of your credit file, showing that the negative information has been removed, claiming that your credit history has now been repaired.

It will seem like a miracle, until you learn that as soon as the credit reporting agencies have completed their investigation, any accurate negative information will be returned to your credit report. You'll be back where you started, minus the fees that you paid to the scammer.

When it comes to your credit report, remember that accurate entries will stay on that report for seven years from the time they're reported to the credit agencies. Bankruptcies stay on a report for fourteen years.

There are many honest companies that can help you with debt problems. But how can you know if a company is legitimate? First, scammers will ask for their money up front, while legitimate credit repair companies can't require payment from their clients until they've performed the services they've promised. In many states, they must also give you a detailed written contract, clearly explaining your legal rights and giving you the option to cancel within three days.

The bottom line: know who you're dealing with when it comes to trying to repair your credit. Mistakes can cost you dearly, doing even more damage to your credit, creating even more debt problems, and sometimes costing large amounts of money.

Copyright © 2005 Jeanette J. Fisher - All Rights Reserved.

Forget what you've been told about credit. "Credit Help!" author Professor Jeanette Fisher was forced into becoming a credit expert. She loves helping people buy houses. Get the credit you need to buy one house or twenty. Visit Real Estate Credit Help Center: