Credit Repair Scams: Don't Believe Their Promises

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The Federal Trade Commission (FTC) along with other federal agencies pledged to crack down on companies that claim to remove negative information from consumer credit reports. To address this problem in more detail, we at CreditGUARD of America, Inc. have put together the following article to educate our clients and consumers about the severity of this problem, how to avoid these scam agencies and steps to take if you have been victimized by one of these agencies.

In the beginning of 2006, the Federal Trade Commission (FTC) along with other federal agencies pledged to crack down on companies that claim to remove negative information from consumer credit reports. To address this problem in more detail, we at CreditGUARD of America, Inc. have put together the following article to educate our clients and consumers about the severity of this problem, how to avoid these scam agencies and steps to take if you have been victimized by one of these agencies.

Scam Agencies

These so-called “credit-repair” agencies are mostly web-based companies that operate through someone’s basement. A majority of these companies have elaborate and technically savvy websites and promotional campaigns that promise to “fix” your bad credit or erase your negative account information for a fee.

Hundreds of such scam agencies send out millions of spam emails and pop-up advertisements with titles such as ‘Credit Problems? No Problem’ or ‘Remove Bankruptcy and Liens from your Credit File’.

These companies charge their clients’ a fee that can range from $50 to more than a $1,000 depending on the client’s credit delinquencies. Usually, 50 percent of the fees are due upfront and the rest due after completion. However, once these agencies get their hands on your money, they do absolutely nothing to improve your credit.

Negative Account Information

What these companies promise to deliver cannot be achieved by any legal means. That means, no company can change, alter or erase any account information from your credit file. Only the three credit bureaus: Equifax, Experian and TransUnion have the authority to change account information on credit reports.

Consumers need to understand that there is no quick and fast way to clean your credit report. If you have any past due payments, liens or bankruptcy in your credit file you have to wait 7 to 10 years to get those black marks off your credit file. In other words, time is the only cure for bad credit.

Credit Report Errors

Under the Fair Credit Reporting Act, you have the right to dispute any account activity in your credit report that you may feel is inaccurate or false. If you believe your credit report contains any reporting errors, you can contact one of the three credit bureaus. Once the credit bureau receives a complaint, it must investigate the matter within a reasonable time period. If it fails to do so, the credit bureau must remove the error from the customer’s credit file.

Reporting inaccurate account information to credit bureaus is the only viable option for consumers who want to increase their credit rating. Any other means of altering or changing credit information without the consent of the credit bureaus is considered illegal and could land you in jail.

Victims of Credit Repair Scams

If you are a consumer who has been victimized by one of these scam agencies you should contact your state Attorney General’s office and appropriate local law enforcement agencies and file an official complaint.

Next, file a complaint with your local consumer protection agency. These agencies are created to protect citizens from these dubious organizations and they have the experience and resources to resolve these situations.

Finally, you should write a letter to the Federal Trade Commission describing your ordeal. While the FTC does not handle individual cases, your case might encourage the FTC to look into the matter and bring appropriate legislations to protect other consumers from these fraudulent organizations. To file a complaint or to get free information on consumer issues, please visit http://www.ftc.gov/ or call toll-free, 1-877-FTC-HELP (1-877-382-4357).

CreditGUARD of America is a non-profit credit counseling agency that assists consumers through debt counseling and financial education. Please visit our web site at http://www.creditguard.org or call 1-800-867-0406 for a free consultation with a certified credit counselor.

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Nemal Perera
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