Consumer Credit Counseling Service News Articles

January is the month of “new beginnings”, “fresh starts”, “do-overs”. And finances usually top the list. Don’t be fooled by credit repair scams.

Good credit is important for many reasons. It makes it easier to get a credit card or loan with favorable terms. Bad credit can make it difficult to rent an apartment, find a new job, or get a cellphone contract.

It’s easy to see why someone with bad credit, who is desperate for help, will fork over hundreds of dollars (sometimes thousands) to a company that guarantees to solve their credit problems.

It’s THIS simple.

Any company that promises it can hide or remove your bad credit history for a fee is scamming you.

If you believe the ads—and you should not—these “credit repair” companies can quickly and dramatically boost your credit scores by removing all negative items (such as late payments and bankruptcies).

“The reality is vastly different from the promise,” said Gregory Ashe, senior staff attorney at the Federal Trade Commission’s Bureau of Consumer Protection. “Accurate negative information and hard inquiries cannot be removed legally from your credit file.”

RED FLAG WARNING

It is illegal for credit repair companies to charge customers until the promised work is done. Federal law, specifically the Credit Repair Organizations Act, prohibits upfront fees of any kind.

Many of the fraudulent credit repair companies sued by the FTC tried to disguise their advance fee. A common ploy is to require a purchase of some kind, such as credit monitoring, in order to use the “free” credit repair service.

If the unrelated service is required prior to getting the credit repair service, then it’s an advance fee, and in violation of the law.

The crooks who run credit repair scams know how to attract customers. They lie, make false promises, and claim they have special ways to do things you can’t do on your own.

Per the FTC, a credit repair firm is fraudulent if the company:

• Insists you pay them before they do any work on your behalf.
• Tells you not to contact the credit reporting companies directly.
• Tells you to dispute information in your credit reports, even when you know it’s accurate.
• Tells you to give false information on your applications for credit or a loan.
• Doesn’t explain your legal rights when it tells you what it can do for you.

Holli Lewandowski, Certified Credit Counselor, Educator, and Advocate

Excerpted from Herb Weisbaum, The ConsumerMan