You see the ads in newspapers, on television, and on the Net. You've hear them on the radio. You get flyers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:
* “Credit problems? Not anymore! ”
* “We can erase your bad credit — guaranteed.”
* “Make a new credit identity — completely legal.”
* “We can remove bankruptcies, judgments, liens, and bad loans from your credit history forever!”
Don't listen to these promises, there's no easy way to fix your credit. The only way to repair your credit is to make timely payments to lenders.
The Scam
Companies appeal to those with bad credit. They promise to restore your credit and end up charging you thousands of dollars. the majority of the time they don't do anything to your credit score and vanish with your money.
The Warning Signs
If you want to respond to a credit offer, beware these tell tale signs of a scam:
* companies that want you to pay up front, before they do anything
* companies that don't tell you your legal rights, or things you can do on your own to help your credit score
* companies that recommend you don't contact a credit reporting agency directly
* companies that suggest that you apply for an Employer Identification Number to try to create a new identity and get a new credit score
* companies that advise you to dispute all information on your credit report, this can be considered fraud, and you could be prosecuted for it.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal offense to lie on a loan or credit application, to lie about your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair agencies are not allowed to ask for money before they have provided their services to you.
The Truth
Nobody can remove negative information from your credit report legally. You are allowed to dispute negative information if it is inaccurate or a mistake. You can do this by calling the credit reporting agency directly and there's no charge. Everything a credit repair agency can do for you, you can do for yourself for little to no cost. According to the Fair Credit Reporting Act (FCRA):
* You’re entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you 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’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re 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, at your request, once every 12 months.
The three companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To get your free credit report, go to annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Don't contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com. You can get all 3 credit reports at once, or you can get them sent to you one at a time. If you want another copy of your credit report, credit reporting agencies may charge you up to $9.50 for another credit report.
* You can dispute mistakes or outdated items for free. Under the FCRA, both the consumer reporting agency and the information provider are responsible for correcting inaccurate or incomplete information in your report. To correct any mistakes, contact the credit reporting agency directly and inform them of the discrepancy.
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