This article is provided and sponsored by:
ClearPoint Credit Counseling Solutions
The ads from credit repair companies pop up everywhere—on telephone polls, in newspapers, on TV and radio, in your email and on the internet.
- “Boost Your Credit Score To 750 In One Week. Guaranteed!”
- “We’ll Erase Your Bad Credit History Simple, Fast & Easy. Guaranteed!”
- “Fix Your Credit Report. Same Day Service. Proven Results.”
You’ll see similar claims over and over. But can credit repair companies be trusted?
Consumer credit counselors at ClearPoint advise consumers to ignore these claims as they’re very likely signs of a scam. In reality, there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes knowledge, time and effort to stick with a personal debt repayment plan.
Credit repair companies can’t deliver an improved credit report using the misleading tactics they promote. No one can remove accurate negative information from your credit report. So after you pay one of these companies hundreds or thousands of dollars, you’re left with the same credit report but out your fees.
According to the FTC, here’s how to evaluate the trustworthiness of credit repair companies. Be cautious if:
- The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
- The company doesn’t tell you your rights and what you can do for yourself for free.
- The company recommends that you do not contact any of the three major national credit reporting companies directly.
- The company tells you they can get rid of negative credit information in your credit report, even if that information is accurate and current.
- The company suggests that you try to invent a “new” credit identity—and then, a new credit report—by applying for an Employer Identification Number to use instead of your Social Security number.
- The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. Even if a credit repair company advises you to do these things, you could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Again, no one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for to do so. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. The Fair Credit Reporting Act (FCRA) reads:
- You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to 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.
- Each of the nationwide consumer reporting companies—Equifax, Experian, and TransUnion—is required to provide you with a free copy of your credit report once every 12 months, if you request it. The three companies share a central website and a toll-free telephone number to order the free annual credit reports the government entitles them to. To order, visit annualcreditreport.com, or call 1.877.322.8228.
Order reports from each of the three consumer reporting companies at the same time, or stagger your requests, ordering one from each different company every four months. (This will allow you to keep an up-to-date check on your credit without having to pay) Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. The above website and phone number are the only legitimate contacts for Americans who want to access their free credit reports. Other companies seek to misrepresent their services as these services and they will charge you various fees. At annualcreditreport.com, the consumer reporting companies may encourage you to purchase a credit score, but you are under no obligation to do so to receive your reports.
Credit repair companies must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
- make false claims about their services
- charge you until they have completed the promised services
- perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
- the payment terms for services, including the total cost
- a detailed description of the services the company will perform
- how long it will take to achieve the result
- any guarantees the company offer
- the company’s name and business address.
If You Need Help
Consider contacting a nonprofit consumer credit counseling organization like ClearPoint Credit Counseling Solutions. Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials. If you enroll in a program, such as a debt management plan, and begin to manage your money better, your credit score will improve and will do so in a natural and legitimate way.