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"Purchasing" A Credit Score?
Beware!
“We’ll help
you erase your bad credit!”
“Raise your
credit score 30 points!”
“Let us wipe a
bankruptcy off your credit report!”
You’ve
probably seen the ads that make these promises, but are they to be
believed? Can these credit-repair companies—also known as credit
clinics—really help you erase bad debt, get a higher credit score, or
make a bankruptcy go away?
Unfortunately,
such outlandish claims simply aren’t true. Although legitimate
credit-repair companies do exist, many other companies are scams. So if
you’re considering hiring a firm to help you improve your credit, here
are four red flags to help you spot a scam:
They want
you to pay for their services up front.
According to the congressional Credit Repair Organizations Act,
credit-repair companies can not require or even ask for payment before
all obligations have been fulfilled. Furthermore, companies are required
to explain to you your legal rights and provide a written contract, so
make sure you read the small print.
They
promise you a “new credit identity.”
Unfortunately, no one can truly get a new identity, credit-based or
otherwise. Some credit-repair companies may ask you to apply for an
Employer Identification Number which you can then use instead of your
Social Security number, but obtaining such identification under false
pretenses is a federal crime and you could be prosecuted.
They
guarantee to remove late payments or bankruptcies from your credit
report.
Legally, it is impossible to remove negative information from a credit
report if that information is accurate. Your information—whether it’s
positive or negative—stays on your credit report for at least seven
years (ten years for bankruptcies) from the time it’s reported.
They try to
dispute every item on your credit report.
Although this practice isn’t illegal, it’s a sure sign that the
credit-repair company is up to no good.
When an item is disputed, it may disappear from credit report
temporarily, but if that item is indeed accurate, it will eventually
reappear on your report.
There are, of
course, legitimate credit-repair companies. Some firms offer to dispute
items you believe are inaccurate and to follow up with the various
credit-reporting agencies. In essence, these companies do the legwork
for you. However, keep in mind that reputable companies such as these
can only do so much. In the end, changing your credit score is up to
you. You can improve your credit by paying your bills on time, regularly
checking your credit report for errors, and allowing time to heal any
negatives. ∆ |
