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Beware of promises to repair your credit

June 26, 2008

This week I came across a web site for a company that claims to be a “credit repair agency.”

This term immediately sent an image of little, red flags streaming across my brain. As I read the company’s web site, the images of red flags were accompanied by the screaming sound of warning bells.

This company promises to repair your credit for a fee, though they don’t disclose the amount of the fee on their web site. The company claims it can increase your credit score by 60 to 125 points within six months. They also claim that they can remove anything from your credit report including bankruptcies and charge-offs. Finally, they claim the only reason people don’t know about this is because the credit reporting bureaus don’t want you to know.

Here is a very important thing to understand about the claims this company and others like it make: THEY ARE NOT TRUE!!!

No one, absolutely no one, can remove legitimate items from your credit report.  If you have an account in charge-off status, it will remain on your credit report for seven years. If you settled an account, that will remain on your credit report for seven years. If you filed for bankruptcy it will remain on your credit report for 10 years. Period. End of story.

If a company claims it can make negative items disappear they are either not telling the truth or engaging in an illegal practice.

If you have negative items on your credit report that are a mistake, you can have them corrected on your own. If there are items that should be removed from your credit report because the statute of limitations has past, you can have those removed on your own. You don’t need to pay a third party to do it for you.

You are entitled to a free copy of your credit report from each of the three credit reporting bureaus each year. You can get this report by visiting www.annualcreditreport.com.

If you see any errors, there will be directions on the web site to guide you through the process to correct the errors. You can also write to the credit reporting bureau requesting the incorrect or expired information be removed.

The only way to increase your credit score is to pay your bills on time, develop a positive credit history and wait for legitimate negative items to drop from your credit report.

If you are still considering doing business with a company that offers credit repair, do your homework. Check the company on the Better Business Bureau’s web site. I found one law firm that claims to specialize in credit repair. A quick visit to www.bbb.org showed the firm had 293 complaints filed against it in the past 36 months.

In addition to the BBB, check with your state attorney general’s office and the Federal Trade Commission.  You can check out companies and look into the FTC operation known as “Operation No Credit” that is targeting agencies making fraudulent claims.

When it comes to matters of finance in general, make sure you know who you’re dealing with and that all terms and fees are disclosed up front.

If you would like even more information about the IRS’s position regarding credit repair and credit counseling agencies, click here.

Written by admin · Filed Under Misc. 

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