Use Extreme Caution When Using Credit Repair Companies

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Sunday, December 14th, 2008 Subscribe To Our Feed

There are many credit repair rip-offs to watch out for. These offers always state that they assist with bad credit, when in reality, far too often, they will overcharge you, cause you to do something illegal, or get you into a worse situation financially. Educate yourself on the more common of these.

1) Credit repair organizations hinting that false information on a loan or credit application would help your situation or that try to get you to apply for an alternate identity. Not only are they promoting dishonesty, they could be putting you in legal trouble. Should you find that a credit repair company is trying to get you to apply for a loan or credit with false or misleading information, you now know to disassociate yourself from them.

These actions could cause you to be charged with fraud, and although it was at the advice of the credit repair company, you will be the one responsible. It would be very unpleasant, to say the least, to have to deal with both credit and legal problems at the same time.

1) Credit repair companies that do simple things and charge you for them – such as putting a budget together for you. Charges asked of you prior to providing any services should also make you wary.

There is an abundance of great information online for anyone wanting to eliminate credit card debt and repair their credit. Do this before you pay someone else for much of the same information.

1) Credit repair companies that promise to take care of your creditors from money you pay to them, but that is kept in an escrow account. This is a huge problem for debtors, since it is a scam.

Here’s how this scam works: you provide money that you intend to be used by the credit repair company to pay down debts. The money is placed in an escrow account by the company where is accumulates. The notion is that the company is to use the money to settle your debts once the account grows to the same amount as your debts. The real problem is that the company may be taking significant amounts of money from the account as an administrative fee, but meanwhile your creditors are not getting paid are increasing your interest charges, and even making legal claims against you. This so-called credit “repair” can wind up doing just the opposite and further damaging your credit rating.

4) Credit repair companies that put pressure on you, try to get you to sign a commitment you haven’t read, or don’t listen to your needs and concerns. These types of companies can’t be trusted and you should move on to someone that can be.

5) Companies that offer fast – even “instant” – credit repair, even when your credit is badly damaged. This is a misleading claim that no legitimate credit repair company can deliver on. Unfortunately, there is no way around the fact that if you have bad credit, it may take years to repair completely. It is generally best to focus you attention mostly on how to eliminate credit card debt, knowing that your credit history will improve over time as a result.

In many cases, credit repair companies will suggest that they can remove items reflecting poor credit from your credit history through a process of disputes. This is simply not true. True and accurate information cannot simply be removed from your credit report. A credit bureau must investigate claims within 30 days, but this does not mean that the item is simply removed automatically. You should refuse to do business with a credit repair company that makes this claim.

Hopefully, these tips will help you avoid credit repair scams and allow you to properly locate companies that can truly help you with your credit card debt elimination plans.

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