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Why We Hate “Credit Repair”

The idea of removing your bad credit and making it better instantly is appealing, especially if you’re currently dealing with loads of debt. But while some credit repair companies may claim to be able to wipe your credit slate clean with the snap of a finger, legitimate credit repair is actually much more complicated than that.

3 Ways to Recognize Credit Repair Scams

While legitimate credit repair companies may be able to help consumers by contacting credit reporting agencies on their behalf to remove inaccurate, obsolete, and erroneous items from their credit reports, other credit repair companies falsely claim they can “erase” your bad credit through file segregation, an illegal method of creating a new credit identity.

Sometimes it can hard to tell whether or not a credit repair agency is legitimate. You should automatically be wary of any credit repair agency if they:

1. Require that you pay up front, usually prior to any services being performed

2. Say you should dispute information in your credit report even if it’s accurate

3. Promise to create a “new” credit identity for you, including a new social security number

The Real Truth About Credit Repair

Any company that claims to be able to erase items from your credit report, whether they’re accurate or not, is not legitimate. That’s because only creditors and credit bureaus have the authority to remove incorrect items. Credit repair companies bait consumers by dangling empty promises and offers to reduce your bad credit immediately. They appear to be a quick, easy way to erase years’ worth of bad debt. Unfortunately, they never are.

Here is how illegitimate credit repair agencies usually work:

After paying a large up-front fee, you will be told to apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) and then to use that number to apply for credit.

The so-called credit repair agency will then encourage you to have this new number associated with another address. Because an EIN closely resembles a Social Security Number (SSN), this is supposed to trick lenders into providing credit because the credit history attached to the EIN is clean.

Because it is a federal crime to make false statements on a credit or loan application, working with credit repair agencies in this way is highly illegal. Not only that, but most of the claims made by these agencies are simply not true. Credit repair cannot remove negative items that legally belong on your credit report. The only tried-and-true way to improve your credit is to pull your sleeves up and start working at overcoming your debt. This is where we can help. Our certified credit counselors work with you AND your lenders to help you reduce your debts and the time it takes to pay them off.

For more information on the dangers of credit repair, or for more information on our nonprofit debt consolidation services, contact us online by filling out the form above or giving us a call at 1-800-500-6489.

Also see:

Beware of Credit Card Scams

Consumer Credit Laws and Your Credit Rights

Why You Should Avoid Payday Loans

Spotting Deceitful Debt Relief Agencies