Credit repair companies are on the rise with the sudden surge of unpaid debt Americans are amassing on a daily basis, and their advertising of services is increasing. Many credit repair companies offer to help improve or fix your credit history for a fee – sometimes affordable, but more often than not, for astronomical rates.
Credit repair companies often claim that they can help you get credit by “cleaning” up or “erasing” bad credit history. Under the Fair Credit Reporting Act, no bad credit that is accurate can be altered. Therefore, credit repair companies cannot do anything that you cannot do for yourself. Legitimate debt will remain in a credit report for about seven years and bankruptcies stay in a report for ten years. The fact is that the only part of your credit history that can be cleaned up or repaired is anything erroneous in your report.
The first step to repairing your credit is to actually learn what is in your file and to correct erroneous information by contacting the major credit bureaus.
In the USA, you are entitled to one free credit report each year from each of the three major credit bureaus, Equifax, Experian and TransUnion . The only authorized web site to use to obtain the free reports is AnnualCreditReport.com. You will not likely get a free credit report from other web sites claiming to offer free credit reports unless you sign up for their credit monitoring or other services, which can sometimes be expensive.
Before you fall victim to a credit repair scam, it’s important to understand that credit repair companies cannot erase your poor credit history. Don’t believe any company that promises to give you a “brand new” credit report. Remember: if it is accurate, no one can require a credit bureau to remove information before the seven to 10-year reporting period is up. The past cannot be changed. If you pay a credit repair company for this purpose, you are paying for nothing. However, if you notice that your credit report contains inaccuracies, you can contact credit bureaus to investigate the items you are disputing. If indeed the information is inaccurate or fraudulent, such information can be removed.
If you decide that repairing your credit may not be a task you want to undertake, make sure that before you hire a credit repair company to fix your credit, you investigate it. Although many of them offer money-back guarantees, a guarantee is only as good as the company that stands behind it. A Better Business Bureau, local consumer affairs office, or chamber of commerce can tell you if they have received any complaints about the company.
If you have already experienced fraudulence with such a company, check to see if there is a law that can help you. Several states have passed laws that strictly regulate credit repair and improvement companies. In some states it is illegal for a company to accept payment in advance for credit report adjusting. These laws may help with getting your money refunded if you have already paid someone in advance for these services.
Credit bureaus are available to serve you as well as your creditors. They cannot alter what is past, but they will work with you to make sure that your credit file is accurate, and they can make suggestions as to how you can improve your credit record. Credit has become a fact of life, and your credit record is your responsibility.
AARP just published an interesting article that underscores the points we are trying to make about the dubious nature of many so-called credit repair companies. The article is called Scam Alert: Credit Repair’s Dirty Business of False Promises. The quote that stood out to us is from Steven Baker of the Federal Trade Commission. “In the last year we have seen an increase of 50 percent in reports of credit repair scam, and to date, we’ve never seen a legitimate credit repair company.”