Credit Repair Companies – Top 10 Tips
The first issue you need to watch for when in need of good credit repair services is the affiliations of the agency you are considering. All ethical credit repair businesses will willingly show you their references on request. These are some important issues you should check out as protection against fraudulent credit repair companies.
1. Check to see that the company is a member of the Ethical Credit Repair Alliance (ECRA) or a similar organization.
You You are often advised to choose businesses who have membership in the BBB (Better Business Bureau) when considering whether to hire a service. But when evaluating credit repair companies, those businesses that are members of the ECRA are most likely to be the best choices.
This body has its own stringent codes of conduct and any business that gets their approval will give you their best services. All credit repair companies that find approval under this organization must maintain high standards of ethics in dealing with their clients. This means protection for you, the consumer, from being “taken” by a predatory scammer.
2. Know what credit repair is before seeking help. Most of those who end up being scammed while they are seeking ways out of a financial jam, have no prior knowledge of what credit repair is all about. It’s important to know what what these companies are able to do and what they cannot do.
Only if you have knowledge of the difference, will you be able to distinguish those companies in which you can place your trust. For example, no one can remove derogatory accounts on your credit report if those accounts are verified by the credit bureaus.
Many credit repair companies telling you that they can give you a clean credit report within a month or less. Think carefully; is this even possible to do legally? If the answer is negative you would do better to pass.
3. Never accept unsolicited offers by e-mail. It’s not fate that sent you an email offering to repair your credit at a time when you are desperately looking for help. These kinds of e-mails come from fraudulent businesses who use shady methods to get your e-mail address, and are sending out millions of spam emails trying to fool a person desperate for help whom they can scam for all they’re worth!
Never be fooled by such shenanigans. In the vast majority of cases these are unscrupulous thieves hoping to prey on the unwary. Reputable credit companies will contact you by e-mail or US mail only after you have ask for them.
4. It is illegal to create a “new identity.” This is the “Big Lie” many people fall prey to, the reason being that it looks like the “magic solution” to all their difficulties. This idea is so widely accepted due to a general ignorance regarding credit repair. This is called”File segregation.” Avoid it like the plague – it’s illegal!
Your credit score is a reflection of your payment history from the onset of adulthood until the present. How can you get a second and “new” such history? And since it’s not possible, any attempt to do so would have to be illegal. So it’s clear that the credit repair companies that offer you such a way out of your problems are fraudulent.
5. Demanding complete payment upfront should raise a “red flag.” The Credit Repair Organizations Act (CROA) stipulates that the agency must provide you with a written contract and that they cannot charge you a fee prior to completion of the services offered. In addition you have three days to cancel the contract if you so choose.
There are companies who do charge an upfront fee for an initial consultation, and charge monthly fees after that as they follow up with the credit bureaus on a continuing basis. But if a company demands their entire fee be paid in advance, chances are the reason is because they realize you will not be inclined to pay later when it becomes clear that their claims have been overstated. Organizations such as these are fraudulent and you would do well to avoid them!
6. Credit repair won’t happen overnight. As we discussed, no reputable organization can solve your credit problems in the blink of an eye or change your credit history entered on the credit report if it can be verified.
In a best case scenario, less serious issues can be fixed within two or three months, by removal of mistakes, and by means of changing your habits so as to pay your bills on time. More serious derogatory items such as leans and foreclosures remain on your report for 7 years ( bankruptcies for 10), notwithstanding the best management of your finances.
If there are bankruptcies, they will be there for 10 years. “Guarantees” that these can be removed overnight means fraud.
7. No contract? Forget it! If you don’t want to be ” taken” make sure there is a contract; and according to the law, this is your right. Dishonest agencies would prefer there’s no contract, and if they do there will be information missing on various aspects of the services to be provided, what the fees are, and the like. You will learn a lot about these businesses based on their contract. And if there is not a contract, do not hire them.
8. If a company makes any guarantees, do not trust them! Not even the best and most experienced agencies will make guarantees in regard to results of their credit services. After looking at your credit report, they can promise to use all legal means to affect improvement in your score. But to guarantee results is dishonest and unrealistic.
Unfortunately, due to the nature of human beings, most people are more inclined to believe – and to hire – an agency that tells them what they prefer to hear, rather than hire a credit repair business who gives them an honest and truthful assessment of the situation. Avoid falling prey to this trap! Even though you would prefer to hear about guaranteed results, credit repair companies that guarantee they can achieve given results are not telling the truth.
9. See if counseling services are offered. Most reputable credit repair companies provide them for free. If the agency you are looking at does not, look a bit beyond. It might not be a trustworthy agency. All agencies of repute encourage and educate people on how to repair credit. The company performs those services that are for those matters that need professional intervention to improve one’s credit.
10. If you’re given wrong advice, look out! There are those businesses that encourage you to dispute every derogatory account on your credit report writing “this is not mine..” Although the short-term results may be impressive, the creditors whose remarks are thus disputed may later counter it, and the bureau will verify it with subsequent investigations.
Given the poor record keeping habits of the credit bureaus, the probability is very high that any trade lines on your credit report has mistakes regarding the details. But credit repair companies that advise you to claim “this is not my account” if this is not truthful, are not worthy of your trust.
As you can see, there are plenty of red flags along the way to warn against possible fraud. The first and most important thing you should do before you seek the services of credit repair companies it is to become knowledgeable regarding credit repair matters. You also need to know the minimum applicable laws before you go for any type of credit repair help. A good way to begin is to visit the FTC Bureau of Consumer Protection website and the Ethical Credit Repair Alliance.
