Credit Repair Companies – Warning Signs
The first thing that needs to be addressed when you want legal and effective credit repair services is the affiliations of the organization you chose for this purpose. All ethical credit repair businesses will willingly provide you with their references on request. These are some important issues you should check out so you can avoid deceitful credit repair companies.
1. The company should belong to the Ethical Credit Repair Alliance (ECRA) or a similar organization. You will often hear it advised to choose businesses who are affiliated with the BBB (Better Business Bureau) When looking for. those businesses affiliated with the ECRA are always a good choice.
This body has its own stringent codes of conduct and the member companies will do their work in the client's best interest. All credit repair companies that have membership in the ECRA will have to maintain high standards in everything they do pertaining to repair of credit. The result is to protect you, the consumer from being "taken" by a predatory scammer.
2. Educate yourself about credit repair before hiring help. Most people who are cheated out of their hard earned money when hiring help with their credit, do not understand just what credit repair is. Make sure you understand what credit repair services can do for you and what they cannot do.
Only when you are well aware of the difference, will you be able to distinguish which companies are dishonest and which are not. For example, negative entries on your credit report that are verified cannot be removed. Many credit repair companies claiming they can completely clean your credit report in as little as a month. Think this over carefully for a moment; is this legally possible? If you answer "No" would you still want to pursue such unethical methods?
3. Avoid unsolicited offers you receive through email. It's not fate that sent you an email offering to repair your credit at a time when you are desperately looking for help. These are fraudulent companies who use shady methods to get your e-mail address, and send out emails to millions of unsuspecting victims hoping to "snare" some needy soul whom they can "take for a ride"!
Don't be taken in by such tricks. Most of the time these are fraudulent companies looking for their next victim. Reputable credit repair companies will make contact with you through e-mails or newsletters only when you have ask for them.
4. Creating a "new identity" cannot be done legally. This is the "Big Lie" many people fall prey to, mainly because it would seem to solve all their problems. This idea is so widely accepted due to a general ignorance regarding credit repair. But the problem is that this technique - called "File segregation" - is illegal!
Your credit score reflects your entire history of financial behavior. So acquiring a "new" history is an impossibility. So if you were to attempt it, doesn't it make sense that it can't possibly be legal? Thus there's no question that the credit repair companies that propose to solve your problems by offering file segregation as a way out are crooks.
5. If an agency wants full payment prior to rendering any services, look out! The Credit Repair Organizations Act (CROA) stipulates that the agency must provide you with a written contract and that payment be made only after services have been performed. You may cancel the contract within three days.
A credit repair business can ask for an upfront charge for initial services, such as a credit report analysis, and then charge additional monthly fees as follow-up with the credit bureaus is continued on an ongoing basis. But if an agency insist on full payment upfront, the odds are they are doing this because they are keenly aware you will refuse to pay once you know that they cannot deliver on their promises. Companies such as these are ripoffs and you would be will advised to run the other way!
6. Repairing credit is a lengthy process. As explained earlier, no honest agency is able to fix credit in a short time or remove negative information that the credit bureaus verify.
At best it takes two or three months to fix minor problems, by getting incorrect information removed from your credit report, and by improving the way you handle your finances and overall payment of bills and loans. More serious derogatory items such as repossessions and foreclosures will stay on your report 7 years, notwithstanding the best management of your finances. Bankruptcies can remain on your credit report for 10 years. If you are given guarantees of a fast removal, you can be sure of fraud.
7. No contract? Forget it! To avoid being scammed, make certain you are given a written contract; under the law a written contract is your legal right. Fraudulent companies will shy away from offering you such a contract, and if they do there will be information missing on aspects of the services, what the fees are, and the like. You will be able to understand the nature of these companies by the contract they offer you. And if there is not a contract.
8. Do not trust any agency that guarantees results! Not even the best and most experienced agencies will make guarantees in regard to results of their credit services. They may reasonably promise that all legal procedures will be used to improve your credit. But to guarantee results is a different matter entirely.
However, the unfortunate reality is, people believe what they want to hear and prefer to hire a company who tells them as much, 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 they can achieve given results are not telling the truth.
9. Look for counseling services. A good many credit repair companies will offer free counseling services.
If the organization under consideration is not offering them, look a bit beyond. It may be a less than trustworthy company. All agencies of repute encourage and educate people on how to repair credit. The services they provide are for those matters that require longer and more complicated interventions to improve one's credit.
10. Wrong advice is a red flag! Some organizations will dispute all negative accounts on your credit report by saying "this is not mine.." Although the short-term results may be impressive, the creditors whose remarks are thus disputed may later counter it, and the bureau will verify it with subsequent investigations.
Because the credit bureaus do a very bad job of keeping accurate records, it's extremely likely that the details of any one trade lines contain errors. But credit repair companies that have you proclaim "this is not my account" if this is not truthful, must not be trusted.
As you can see, there are plenty of red flags along the way to warn you against scams. The most important action you must take before hiring credit repair companies is to do your "homework" and learn about credit repair, what it is, what to expect, and what to avoid. Also learn about laws regarding credit repair and credit repair organizations prior to hiring assistance with your credit. For starters visit the FTC Bureau of Consumer Protection website and the Ethical Credit Repair Alliance.