written by: Finn Orfano•edited by: Brian Nelson•updated: 5/4/2009
Recognize a credit repair scam by these four indicators.
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Credit repair scams can be personally vicious. They prey on people who already have financial trouble or bad credit and definitely don’t need to throw away their hard-earned money. There isn’t a shortcut to establishing a good credit history. When you are looking for help to correct misinformation in your credit reports, be sure to avoid companies that advertise or claim the following four indicators.
Legitimate credit repair companies don’t charge an up-front fee. Many fraudulent companies claim they can restore your creditworthiness for a fee. No company can guarantee results to all potential customers (victims) because they don’t know exactly what is in your personal credit history that can or can’t be corrected.
Credit repair companies can’t remove bad information from a credit history file. In fact, any information that is accurate – good or bad – remains in the credit history for a specified period of time according to the American law that applies. Most fraudulent credit repair companies claim that if information on a credit report isn’t completely accurate, they can challenge it and have it permanently removed from your credit report. You don’t need a company to represent you to challenge something in a credit report. You can do this yourself for free by contacting the credit reporting agencies directly. You, a credit repair company or anyone else can’t remove anything from a credit report. The credit reporting agencies aren’t allowed by American law to remove any information from any credit report that is accurate. However, credit reporting agencies can correct inaccurate information in your credit report after a dispute has been filed and they have verified the disputed information as inaccurate.
A company can’t provide you with a different social security number or employer identification number. When a credit repair company advises you to purchase from them or apply for an employer information number from the Internal Revenue Service, then use it to create a new credit history, the company and services are fraudulent. You can’t erase accurate information by simply using a different identification number. This is illegal and a felony in the USA. Remember that you are responsible for any fraud committed in your name even if you didn’t know it was against the law.
Protect yourself by avoiding companies that falsely advertise and guarantee their services for a fee. In addition to collecting your fee and not providing the services they advertised, fraudulent credit repair companies now have your identification (name, address, social security number, drivers license number and account numbers) that potentially can be used for identity theft. So, “if it sounds too good to be true, it probably is."
For a general review about scams, read this article. To report a possible credit repair scam, contact the FTC.