Credit Repair Scams

People are being bombarded with credit repair claims on the radio, in newspapers, on TV, and the internet which tout:

      •      "Credit problems? No problem!"

·      "We can erase your bad credit-100% guaranteed."

·      "Create a new credit identity-legally."

·      "We can remove bankruptcies, judgments, liens, and bad loan from your credit file forever!"

All these claims are false. The only way to improve the credit report is through a conscientious effort and by repaying debt on a timely basis.

Warning signs of a scam credit repair scam include:

1.       The company requires the client to pay for  the credit repair  service before any services are provided.

2.        The company does not advise the client about their legal rights and how they can improve the report themselves.

3.       The company recommends that the client does not contact the company directly.

4.        The company suggests that the client get a new credit report by applying for an Employer Identification Number to use for credit submissions rather than a Social Security Number.

5.       The company advises the client to dispute all information in the credit report or take an illegal action such as creating a new credit identity.

Warning: An individual can be prosecuted for mail or wire fraud if they use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

By law, credit repair organizations must give the client a copy of the "Consumer Credit File Rights under State and Federal Law" before any contract is signed. The contract must be in writing and spell out the client's rights and obligations. Credit repair companies are not allowed to:

1.       Make false claims about their services.

2.       Charge the client until they have completed the promised services.

3.       Perform any services until they have the client's signature on the contract and have completed a three-day waiting period. During this cooling off period, the client can cancel the contract without paying any fees.

The credit repair contract must specify:

1.       The total cost of the services

2.       A detailed description of the services performed

3.       How long it will take to achieve the results

4.       Any "guarantees" they offer

5.       The company's name and business address

Anyone with issues regarding credit repair scams should contact their local or state consumer protection agency, State Attorney General, or Better Business Bureau.