Save your time
and money by knowing the signs of a scam
You see credit
repair service offerings in newspapers, mail flyers, on TV or the Internet, and
hear them on the radio or phone calls. Many make the same claims:
problems? No problem!”
“We can remove
bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase
your bad credit – 100% guaranteed.”
a new credit identity.”
The fact is
there is no quick fix for creditworthiness. You can improve your credit report
legitimately. It takes time, a conscious effort, and sticking to a personal
debt repayment plan.
credit repair scam
companies target consumers who have poor credit histories with promises to
clean up their credit report so they can get a car loan, a home mortgage,
insurance, or even a job once they pay the company a fee for the service. The
truth is these companies cannot deliver an improved credit report for you using
the tactics they promote. No one can legally remove accurate negative
information from your credit report. So after you pay them hundreds or
thousands of dollars in fees, you are left with the same credit report and
someone else has your money.
Here is how to
tell if the company behind a credit repair offer it is up to no good:
wants you to pay for credit repair services before they provide any services.
Under the Credit Repair Organizations Act, credit repair companies cannot
require you to pay until they have completed the services they have promised.
does not tell you your rights and what you can do for yourself for free.
recommends that you do not contact any of the three major national credit
reporting companies directly.
tells you they can get rid of most or all the negative credit information in
your credit report, even if that information is accurate and current.
suggests that you try to invent a “new” credit identity – and then, a new
credit report – by applying for an Employer Identification Number to use
instead of your Social Security number.
advises you to dispute all the information in your credit report, regardless of
its accuracy or timeliness.
You may find
yourself in legal trouble if you follow illegal advice and commit fraud. It is
a federal crime to lie 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.
You could be
charged and prosecuted for mail or wire fraud if you use the mail, telephone,
or Internet to apply for credit and provide false information.
regarding credit repair
No one can
legally remove accurate and timely negative information from a credit report.
The law allows you to ask for an investigation of information in your credit
file that you dispute as inaccurate or incomplete at no charge.
hire a company to investigate on their behalf, but anything a credit repair
clinic can do legally, you can do for yourself at little or no cost. According
to the Fair Credit Reporting Act (FCRA):
entitled to a free report if a company takes “adverse action” against you, like
denying your application for credit, insurance, or employment. You have to ask
for your report within 60 days of receiving notice of the action.
The notice will
give you the name, address, and phone number of the consumer reporting company.
You are also entitled to one free report a year if you are unemployed and plan
to look for a job within 60 days; if you are on welfare; or if your report is
inaccurate because of fraud, including identity theft.
Each of the
nationwide consumer reporting companies – Equifax, Experian, and TransUnion –
is required to provide you with a free copy of your credit report once every 12
months, if you request it.
To order your
or complete aAnnual Credit Report Request Form and mail it to:
Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You may order
reports from all three consumer reporting companies at the same time or you can
stagger your requests. By staggering your ordering – one from a different
company every four months – you can monitor your file more frequently. Keep
track of the dates you requested a free credit report from each company. A fee
may be charged for re-ordering more than one report from the same reporting
company in less than a 12-month period.
Do not contact
the three nationwide consumer reporting companies directly or use other
providers of credit reports to obtain your free report. You may end up paying
for a report when another method is used outside of the FCRA contacts provided
above. If the report is free you could find yourself paying for additional
services outside of the report itself.
how to dispute mistakes or outdated items at no charge is found on your credit
report. Under the FCRA, both the consumer reporting company and the information
provider (that is, the person, company, or organization that provides
information about you to a consumer reporting company) are responsible for
correcting inaccurate or incomplete information in your report.
advantage of all your rights under the FCRA, contact the consumer reporting
company and the information provider.
Step 1: Tell
the consumer reporting company, in writing, what information you think is
inaccurate. Include copies (NOT originals) of any documents that support your
position. In addition to providing your complete name and address, your letter
should identify each item in your report you dispute; state the facts and the
reasons you dispute the information, and ask that it be removed or corrected.
You may want to
enclose a copy of your report, and circle the items in question. Send your
letter by certified mail, “return receipt requested,” so you can document that
the consumer reporting company received it. Keep copies of your dispute letter
and enclosures. A sample dispute letter is available below.
reporting companies must investigate the items you question within 30 days –
unless they consider your dispute frivolous. They also must forward all the
relevant data you provide about the inaccuracy to the organization that
provided the information.
After the information
provider receives notice of a dispute from the consumer reporting company, it
is required to investigate, review the relevant information, and report the
results back to the consumer reporting company.
investigation reveals that the disputed information is inaccurate, the
information provider has to notify the nationwide consumer reporting companies
so they can correct it in your file.
investigation is complete, the consumer reporting company must give you the
results in writing and a free copy of your report if the dispute results in a
change. If an item is changed or deleted, the consumer reporting company is not
permitted to put the disputed information back in your file unless the
information provider verifies that it is accurate and complete.
reporting company also must send you written notice that includes the name,
address, and phone number of the information provider. If you ask, the consumer
reporting company must send notices of any correction to anyone who received
your report in the past six months.
You also can
ask that a corrected copy of your report be sent to anyone who received a copy
during the past two years for employment purposes.
investigation does not resolve your dispute with the consumer reporting
company, you can ask that a statement of the dispute be included in your file
and in future reports.
You also can
ask the consumer reporting company to provide your statement to anyone who
received a copy of your report in the recent past. You can expect to pay for
Step 2: Tell
the creditor or other information provider, in writing, that you dispute an
item. Be sure to include copies (NOT originals) of documents that support your
position. Many providers specify an address for disputes.
If the provider
reports the item to a consumer reporting company, it must include a notice of
your dispute. And if you are correct – that is, if the information is found to
be inaccurate – the information provider may not report it again.
accurate negative information
information in your report is accurate, only the passage of time can assure its
removal. A consumer reporting company can report most accurate negative
information for seven years and bankruptcy information for 10 years.
about an unpaid judgment against you can be reported for seven years or until
the statute of limitations runs out, whichever is longer. To calculate the
seven-year reporting period, start from the date the event took place.
There is no
time limit on reporting information about criminal convictions; information
reported in response to your application for a job that pays more than $75,000
a year; and information reported because you have applied for more than
$150,000 worth of credit or life insurance.
Repair Organizations Act
federal Credit Repair Organization Act, credit repair organizations must give
you a written contract that spells out your rights and obligations. Read these
documents before you sign anything.
A credit repair
claims about their services.
until they have completed the promised services.
services until they have your signature on a written contract and have
completed a three-day waiting period. During this time, you can cancel the
contract without paying any fees.
Be sure the
terms for services, including the total cost.
description of the services the company will perform.
how long it
will take to achieve the result.
the company offers.
name and business address.
If you need
you have a poor credit report does not mean you cannot get credit. Creditors
set their own standards, and not all look at your credit history the same way.
Some may look
only at recent years to evaluate you for credit, and they may give you credit
if your bill-paying history has improved. It may be worthwhile to contact
creditors informally to discuss their credit standards.
If you are
unable to create a workable budget and stick to it, to work out a repayment
plan with your creditors, or to keep track of your mounting bills, you might
consider contacting a credit counseling organization.
counseling organizations are nonprofit and work with you to solve your
financial problems. But remember that “nonprofit” status does not guarantee
free, affordable, or even legitimate services.
In fact, some
credit counseling organizations – even some that claim non-profit status – may
charge high fees or hide their fees by pressuring consumers to make “voluntary”
contributions that only cause more debt.
counselors offer services through local offices, the Internet, or on the
telephone. If possible, find an organization that offers in-person counseling.
Many universities, military bases, credit unions, housing authorities, and
branches of the U.S. Cooperative Extension Service operate nonprofit credit
institution, local consumer protection agency, and friends and family also may
be good sources of information and referrals.
If you are
considering filing for bankruptcy, be aware that bankruptcy laws require that
you get credit counseling from a government-approved organization within six
months before you file for bankruptcy relief.
You can find a
state-by-state list of government-approved organizations on the website of the
U.S. Trustee Program at www.usdoj.gov/ust. That is the organization within the
U.S. Department of Justice that supervises bankruptcy cases and trustees.
Be wary of
credit counseling organizations that say they are government-approved, but do
not appear on the list of approved organizations.
credit counseling organizations can advise you on managing your money and
debts, help you develop a budget, and offer free educational materials and
workshops. Their counselors are certified and trained in the areas of consumer
credit, money and debt management, and budgeting. Counselors discuss your
entire financial situation with you, and can help you develop a personalized
plan to solve your money problems. An initial counseling session typically
lasts an hour, with an offer of follow-up sessions.
your credit history, financial advisors and consumer advocates recommend
reviewing your credit report periodically for three important reasons:
in your credit report affects whether you can get a loan or insurance – and how
much you will have to pay for it.
It is important
to make sure the information is accurate, complete, and up-to-date before you
apply for a loan for a major purchase like a house or car, buy insurance, or
apply for a job.
It can help you
deter, detect and defend against identity theft. That is when someone uses your
personal information – like your name, your Social Security number, or your
credit card number – to commit fraud. Identity thieves may use your information
to open a new credit card account in your name. Then, when they do not pay the
bills, the delinquent account is reported on your credit report. Inaccurate
information like that could affect your ability to get credit, insurance, or
even a job.
Your City, State, Zip Code
Your Account Number
Name of Creditor
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute a billing error in the amount of $______on my account. The amount is inaccurate because (describe the problem). I am requesting that the error be corrected, that any finance and other charges related to the disputed amount be credited as well, and that I receive an accurate statement.
Enclosed are copies of (use this sentence to describe any enclosed information, such as billing statements, sales slips, payment records) supporting my position. Please investigate this matter and correct the billing error as soon as possible.
Enclosures: (List what you are enclosing.)