Beware of Credit Repair Scams

2009 may go down as the year when more Americans resolve to fix their credit than at any time in history – because high scores are now a requisite for getting any kind of decent interest rates.

In fact, without good scores, consumers might not get any loans at all!

Banks are running scared in the face of mass foreclosures and defaults on credit card debt, so want to feel very certain that you’re going to pay them back before they let you have their money.

In response to this need to raise credit scores, bogus credit repair companies are popping up all over. You’ve probably already found them in your in-box or your postal mail box.

But don’t bite.

Unless you’re dealing with a non-profit credit-counseling company who will help you take control of your finances through various kinds of counseling, you’re probably hearing from a scam artist.

Some of the credit repair companies will do one thing for you: they’ll help you remove errors from your credit report. But at a hefty price for something you can do yourself.

Others will take your money and give you no results at all, so your best move is to say “Thanks but no thanks.” Many require payment up front, which is against the law. If you’ve dealt with a credit repair company and paid them before they showed you results, call the FTC at 877-FTC-HELP and report them.

Reading your report and taking action to remove incorrect information is important, and the chance of finding errors is high. In fact, one in four credit reports contain errors. These include data entry errors along with old information that should have been removed after 7 years.

To have incorrect information removed from your file, you must file a dispute with each of the credit bureaus that lists that information. They must then investigate and will report back to you in about 30 days. The business reporting the disputed information must also look into the claim. Then when a mistake is confirmed you can request the credit bureau send a corrected report to any prospective lenders.

Of course it is best to keep a close eye on your credit report so that you have any errors corrected long before you need to show your scores to a prospective lender. Be sure to get a credit report with scores, so you know where you stand.

The way bogus credit repair companies propose to repair your credit is to repeatedly file disputes with the credit reporting bureaus until they get tired of responding and remove the information from your file. Even if this worked, it would take many, many months of repeatedly filing the dispute.

The best plan is to steadily work at paying off that debt.

If you are struggling under a heavy debt load due to job layoffs or illness, do contact your creditors and try to negotiate better terms for repayment. Many will work with you on lowering your interest rate, removing late fees, etc.

If you don’t feel capable of handling these negotiations on your own, check with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies to find a reputable credit counselor. Often these services are free. your resource for free credit reports, credit cards, loans, and free credit repair advice.

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Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.