Credit Repair: A Scam?

"We can erase your bad credit - 100% guaranteed." "Create a new credit identity - legally."

Sounds familiar doesn't it? Don't believe what you read though, only time, effort, and a personal debt repayment plan can improve bad credit.

The Scam

Companies promise, for a fee, to clean your bad credit. After you pay them thousands of dollar, they vanish, without improving your credit. So now you still have bad credit, and less money.

Warning Signs

If you decide that you want to use a credit repair company, look for these signs to avoid a scam.

*The company wants you to pay for credit repair before they perform any services

* The company doesn't tell you your legal rights and what you can do for yourself (for free)

* The company recommends that you NOT contact a credit bureau directly

* The company suggests that you apply for an Employer Identification Number to use instead of your Social Security Number

* The company advises you to dispute all information in your credit report, or suggests that you take any illegal actions, such as creating a new identity (if you follow illegal advice you could be prosecuted as well)

The Truth

No one can legally remove accurate and timely negative information from their credit report. Everyone is entitled to request an investigation of information that they dispute as inaccurate or incomplete. There is no charge for this - everything that a credit repair company can do for you legally, you can do yourself for no cost.

According to the Fair Credit Reporting Act:

* You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bereau's name, address, and telephone number.

* You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing along with any supporting documentation. (Don't send originals)

* When the investigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change.

* If the investigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. There is no charge for this.

Have you been victimized?

If you've had a problem with a credit repair company there are laws in place to protect you. Contact your local consumer affairs office or your state Attorney General. You may also contact the FTC, although they cannot resolve individual credit problems they can act against a company if they see a pattern of possible violations. You can reach them at 1-877-FTC-HELP, TDD 202-326-2502, Consumer Response Center, FTC, Washington, DC 20580,

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