Credit Repair Companies – Don’t Get Scammed

By MyVine | July 14, 2011

The first issue you need to watch for when in need of good credit repair services is the affiliations of the organization under consideration. Every trustworthy agency will be happy to show you their references on request. Here are some pointers that you should keep in mind to protect yourself from fraudulent credit repair companies.

1. The organization should have a membership in the Ethical Credit Repair Alliance (ECRA) or another reputable regulatory body. You are often advised to choose businesses that are subscribed to the BBB (Better Business Bureau) But when evaluating. those businesses that are members of the ECRA are among the best choices available.

This organization requires that its members agree to a stringent code of professional ethics and the member companies will represent your best interest. All credit repair companies that find approval under this professional alliance will be held to high ethical standards in dealing with their clients. As a result this means protection for you from being scammed by a dishonest company.

2. Know what credit repair is before seeking help. Most people who are cheated out of their hard earned money when hiring help with their credit, do not know anything about what repair of credit involves. It’s important to know what these companies are able to do and what they cannot do.

Only when you know clearly this difference, can you identify those companies in which you can place your trust. For instance, derogatory accounts on your credit report cannot be removed if the credit bureaus verify their accuracy. There are a lot of credit repair companies claiming to be able to completely clean your credit report in a very short time. Think this over carefully for a moment; can this be done without breaking the law? If the answer is negative you had best pass on their services.

3. Ignore any offers you receive by e-mail. At a time when you find yourself in financial desperation, don’t think for a moment that it’s good fortune that sent you such an e-mail. These kinds of e-mails come from fraudulent businesses who use shady methods to get your e-mail address, and send out emails to millions of unsuspecting victims meaning to trick someone in financial distress whom they can “take for a ride”!

Don’t be taken in by such tricks. In 99.9 percent of cases these companies are ripoff artists searching for unsuspecting victims. Reputable credit repair companies will contact you through newsletters or emails only after you have asked to receive them.

4. It is illegal to create a “new identity.” This fallacy is believed by many people, the reason being that it looks like the “magic solution” to all their difficulties. This belief is once again mainly because people do not understand what credit repair is all about. This illegal practice is called “File segregation” and will get you in deep trouble with the law!

A credit score is an aggregate of the history of your financial behavior from the day you became an adult until the present. How can you get a second and “new” such history So if you were to attempt it, doesn’t it make sense that it can’t possibly be legal? So it’s glaringly obvious that the credit repair companies that offer this “solution” as a way out of your troubles are crooks.

5. If an agency wants full payment prior to rendering any services, look out! Under the Credit Repair Organizations Act you need to have a detailed written contract from the agency beforehand and they must not collect fees until they have rendered their services. You may cancel the contract within three days.

A company may charge a fee up front for a consultation or analysis of your credit report, and thereafter charge monthly fees as they follow up with the credit bureaus on a continuing basis. But if an agency insist on full payment upfront, it may be because they are aware you will refuse to pay when it becomes clear that they can’t perform as promised. These agencies are scammers and you must not deal with them!

6. Repairing credit is a lengthy process. As explained earlier, no honest agency can improve your credit score overnight or delete derogatory accounts from your credit report if it is verifiable.

In a best case scenario, less serious issues can be fixed within two or three months, by correcting errors in your report, and by means of changing your habits so as to pay your bills on time. More serious problems like foreclosures and the like stay on your credit report for 7 years, even with the best financial management. It will be 10 years before bankruptcies can be deleted. If you are given guarantees of a fast removal, you can be sure of fraud.

7. No contract, no deal! If you don’t want to be ” taken” make sure there is a contract; under the law a written contract is your legal right. Scammers are leery of presenting a contract, and if they do present one, there will be an absence of information on various aspects of the services to be provided, what the payment will be, etc. You will acquire an insight into these agencies by the contract they offer you. If they do not present you with a contract.

8. Do not trust any agency that guarantees results! Not even the best and most experienced agencies can make guarantees as far as results of their services. They can assure you – after they study your report – that they will improve your score by any available legal means. But to guarantee results is dishonest and unrealistic.

Unfortunately human nature being what is, people prefer to hire a organization when they are told what they want to hear, rather than hire a company who is telling the truth. Avoid this all too common self deception! Although you might rather hear promises of positive results, credit repair companies that guarantee results are ripoffs.

9. Look for counseling services. A lot of credit repair companies will offer free counseling services.

If the agency you are looking at does not, look a bit deeper. It might be an organization unworthy of your trust. All agencies of repute encourage and educate people on how to repair credit. The company performs those services that are for those matters that require professional expertise to clean up all derogatory errors on the credit report.

10. Wrong advice is a red flag! There are those businesses that encourage you to dispute all the negative entries on your credit report by saying “this is not my account..” Although the short-term results may be impressive, the creditors whose trade lines were disputed may later counter it, and the credit bureaus will verify it with subsequent investigations.

Given the shabby record keeping on the part of the credit bureaus, the probability is very high that any trade lines on your credit report has mistakes regarding the details. But credit repair companies that have you proclaim “this is not my account” even if it is, are not trustworthy.

As you can see, there is no shortage of warning signs to warn you against scams. The most important action you must take before hiring credit repair companies is to educate yourself on what “credit report” and “credit score” mean. You also need to know the minimum applicable laws prior to hiring assistance with your credit. For starters visit the FTC Bureau of Consumer Protection website and the Ethical Credit Repair Alliance.

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