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Thread: Credit Repair Scams, What You Need to Know

  1. #1
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    Jun 2010
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    Credit Repair Scams, What You Need to Know

    Your credit score is a number with increasing importance in many aspects of our lives. Where it once was basically a determinant of how likely it was you could get a loan and how much you'd pay for it, now it's being used to screen job applications. There are any number of companies out there that offer to help you fix your credit score for a fee and a some of these companies are outright scams. So before you pay someone for their help here are a few things you should know:

    Upfront Fees:

    Does the firm you are considering ask you to pay in advance for any of their service? If so they are breaking the law and are almost certainly a scam. The Credit Repair Organizations Act lists upfront fees among practices prohibited in this statute (section 404).

    Payment in Advance.--No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
    Accessing your Credit Report:

    There are any number of services you can pay to get access to your credit reports for the three major reporting agencies but you are entitled by law to a copy of the reports once a year free of charge. The details are available on the FTC website linked here, also on that page ware warnings about websites that might use names and phrases like "free credit report" in their advertising but who hide their fees in small print. There are a few other circumstances under which you can obtain copies of your credit report without paying a fee. From the FTC link above:

    Q: Are there any other situations where I might be eligible for a free report?

    A: Under federal law, you’re entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, a consumer reporting company may charge you up to $10.50 for another copy of your report within a
    12-month period.
    Disputing Information in Your Report:

    If there is any inaccurate information in your credit report, you do not need to pay anyone to dispute it with the reporting agency you can do that yourself. This page on the FTC website describes the process. Please be aware that the only thing that can remove ACCURATE information that is damaging your credit score is time, seven years being typical. ANY credit repair service that claims otherwise IS a scam.

    Some credit repair scams will try to use a new Employer Identification Number (EIN) or some other similar trick to start a fresh credit profile for you, without any of your past problems. This is illegal and can get you in far more trouble than your old credit score gave you. And if you're being pitches solutions like this you can be sure the service you're dealing with is fraudulent.

    With tough economic times many people let their frustrations color their judgment and might look for hope from sources they'd otherwise never be desperate enough consider. There are completely discredited theories abounding which hold that the IRS is illegitimate so none of us owe federal taxes or that all bankers are evil so we don't need to pay our debts. People selling these ideas sometimes use terms like "UCC Redemption" or "Accepted for Value" in trying to describe why you don't really owe anyone anything. For a price they will tell you the "secret knoledge" they claim to possess which will make all your bills disappear but the truth is only thing that will vanish is the money you paid them.

    Never pay up front for credit repair services, that is the first and most important way to avoid these scams. By law any credit repair service to provide you with a disclosure statement informing you of your rights as spelled out in the Credit Repair Organizations Act as linked above. These include:

    • Details about your rights to obtain your credit report.
    • Details of your rights to dispute the information in your report.
    • If the credit bureau's reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit bureau, to be kept in your file, explaining why you think the record is inaccurate. The credit bureau must include a summary of your statement about disputed information with any report it issues about you.
    • That you have a right to sue a credit repair service that violates the Credit Repair Organization Act
    • You have the right to cancel your contract with any credit repair service for any reason within 3 business days from the date you signed it.
    • There are more rights enumerated than are listed here.

    They also must present you with a written contract for you to sign before you have any obligation to them. This contract must include:

    • The terms and conditions of payment, including the total amount of all payments to be made by the consumer to the credit repair service.
    • A full and detailed description of the services to be performed by the credit repair service for the consumer, including any guarantees of performance and an estimate of how long it will take to perform their services.
    • The credit repair service's name and principal business address.
    • Your rights to cancel without obligation in the first three days.

    If the company you hire to fix your credit failed to provide with this information or it is in violation of any other portion of the Consumer Credit Protection Act, the act also describes the legal and civil remedies available to you.
    So your prophets of finance have fallen on their collective proverbial face, and you hear muffled voices calling: Welcome to the human race.
    You made a killing dealing real estate at NASA selling cemetery plots in outer space til some falling coffins crashed upon your doorstep: Welcome to the human race.

    Open up your heart...

    Welcome to

  2. #2
    Join Date
    Jun 2010
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    Re: Credit Repair Scams, What You Need to Know

    Personally I feel the whole credit score thing is as much a scam now as the alleged 'repairers'.

  3. #3
    Join Date
    Jun 2010
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    Re: Credit Repair Scams, What You Need to Know

    Thanks for the info, GlimDropper. I have considered contacting a credit repair company to see if they could help or give suggestions as to how I can repair my credit, besides the obvious of paying the bills on time, that is.

    Does anyone know if any of the 3 credit repairing agencies have posted anywhere how they calculate the score or is it all secret proprietorial information? If it is all secret calculations, how is the average consumer suppose to know if the number has been calculated correctly? The last time I checked, my score varied by over 50 points between the 3 agencies, is that normal?

  4. #4
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    Jun 2010
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    Re: Credit Repair Scams, What You Need to Know

    Each credit reporting agency calculates your score and each score may be different because the credit history each agency has about you may be different. Lenders may make a credit card or auto loan decision based on a single agency's score, although others such as mortgage lenders often will look at all three scores.
    FCIC: Your Credit Scores

    One first has to determine exactly what type of score one is referring to. There are numerous scores sold in the marketplace. FICO produces scores used by TransUnion and Equifax and has been a score developer the longest. Experian has abandoned this scoring model and relies on their less-popular "PLUS" system. The 3 companies also use VantageScore, a competing score technology to FICO.
    Credit score - Wikipedia, the free encyclopedia

    How Are Credit Scores Calculated? Learn What Affects Your Credit Score
    A half-truth is a whole lie.

  5. #5
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    Jun 2010
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    Re: Credit Repair Scams, What You Need to Know

    If you live in the USA you can get a free report from the Big three credit companies (Equifax, Experien and Transunion). You are allowed one free report from each once a year.


    Stay away from the so called credit repair companies as you will be paying more than what it is worth. I have successfully sued the big three and several collection agencies for placing false information on my credit report. I am now listed a long with my Attorney as a person not to call as you will get sued should you fail to abide by either the Fair Debt Collections Practices Act or The Fair Credit Reporting Act.

    If you need any information concerning what YOU can do you may contact me at:

  6. #6
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    Jun 2010
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    Re: Credit Repair Scams, What You Need to Know

    7 Ways to Recognize a Credit Repair Scam

    You have bad credit and you want to make it better quickly and with a low amount of effort. You’re like thousands of other Americans who also have bad credit. Being desperate for better credit can leave you vulnerable to credit repair scams. Don’t let yourself be taken advantage of.

    Credit repair organizations are governed by a law known as the Credit Repair Organizations Act. This federal law requires any credit repair service to fulfill certain obligations to you. You should avoid any credit repair service that doesn’t follow these rules.

    Seven Signs of a Scam

    You could be getting scammed if any of the following are true:

    1) You aren’t given a copy of the “Consumer Credit File Rights Under State and Federal Law” letting you know your rights to obtain acredit report and dispute inaccurate credit report information.

    2) You aren’t given a copy of the contract to view before you’re asked to sign it.

    3) The contract doesn’t contain the following information:
    • The amount you are being charged
    • Details about the services being performed on your behalf
    • The date by which the services will be performed (or the time period required to perform the services)
    • The name and business address of the organization
    • A statement letting you know you can cancel the contract within 3 days

    4) You’re asked for payment before the services have been performed

    5) The company promises to remove accurately reported information from your credit report

    6) The company promises to create, or asks you to create, a “new” identity with a new social security number or federal employer identification number (EIN)

    7) You’re asked to sign a form waiving your rights under the CROA

    Alternative to Buying Credit Repair
    If you’re considering a credit repair service, keep in mind there is legally nothing a credit repair company can do to improve your credit that you can’t do yourself. Many of these companies promise to remove harmful negative information from your report. If the information’s wrong, you have the right to dispute it off your report. You only need to write the credit bureau providing the report. However, when the information is correct, you don’t have the right to dispute it, nor does a credit repair company.

    You might not be prosecuted for disputing correct information on your credit report, but you can be prosecuted for fraud if you lie on a credit application. For example, it’s fraud to answer “no” that you have never filed bankruptcy when you actually have. Just because you, or the credit repair organization you hired, disputed the bankruptcy from your credit report doesn’t mean the bankruptcy never existed.

    What to Do If You've Been Scammed

    Don’t let supposed credit repair organizations get away with scams. Take action if you feel your rights have been violated. Start by reporting the organization to your state attorney general. You can visit the National Association of Attorneys General’s website to find an attorney general in your state. Send a complaint to the Federal Trade Commission and the Better Business Bureau.

    Before you use a company’s credit repair services, do some research with the BBB, FTC, and your state attorney general to find out if there are any existing complaints. Avoid companies that consumers have already complained about.

    Suggested Reading

    The only thing necessary for the triumph of evil is for good men to do nothing


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