When faced with bad credit, a person can become vulnerable to credit repair scams. In the hopes to get out of bad credit right away, some consumers may sign up for the wrong kind of help and instead of finding a solution, they may find themselves stuck in an even worse situation.
What are some things you need to know about bad credit repair?
How can you avoid being a victim of a credit repair scam? How can you protect yourself and find a real solution?
The Promise of Instant Credit Fix
You may see a lot of advertisements promising instant credit repair. Many so-called “debt relief” agencies claim that they can magically turn bad credit history into good credit with no hard work. All you have to do is sign up for their “credit repair” service, pay the upfront fee, and wait until your bad credit goes away. But is there any truth to these claims?
In reality, no one can erase negative information from your credit report if it is accurate. The only time you can request the credit bureau to delete the negative information is if that information has been in your report for more than its due time and if it is erroneous, unauthorized, or false.
For instance, if you have record of foreclosure that has been in your file for more than seven years, then you can request the credit bureau to take the negative remark off from your report. If you want to dispute unauthorized charges in your account, the bureau will conduct an investigation and if your dispute is found valid, then the necessary corrections will be made.
However, if a certain credit repair agency promises to set you free from bad credit, when you know for a fact that you have debts to pay, then obviously you are dealing with a scammer.
Watch Out for the Credit Repair Trap!
The Federal Trade Commission has issued a warning for all consumers seeking credit repair to be more cautious. There are signs that can help you distinguish whether a credit repair or credit counselling agency is legitimate or a fraud. Some of these red flags include the following:
You are asked to pay an upfront fee before any service is rendered.
You are prevented or discouraged from checking your own report from three credit bureaus.
You are assured that all derogatory remarks in your credit report can be erased.
You are encouraged to dispute accurate information in your report.
You are advised to use an Employer Identification Number in your loan or credit application to conceal your personal credit.
Your rights and privileges as a consumer are not explained to you.
For more information, visit the FTC’s fact sheet online.