Don’t be taken in by one of the many bogus credit repair out there. These deals usually promise help with damaged credit, but what usually happens it that they charge far too much, get you into an illegal situation, or otherwise make your financial situation worse. Here are some of the more common scams to be aware of and avoid.
1) Scam organizations that promote applying for credit or a loan with incorrect information or that try to get you to a second identity. In addition to being dishonest, it is not legal. Should a credit repair company try to talk you into trying for a loan with anything but factual information, you now know to avoid that company.
You could be charged with fraud if you allow this to happen, and it will be your responsibility for these actions, even if it was at the suggestion of the credit repair company. What could be worse than your credit problems, if not the prospect of adding legal issues, too.
1) Credit repair companies that charge fees to do relatively simple tasks that really would be best for you to do yourself – such as preparing a budget. You should also be wary of companies wanting to charge you money up front.
There is an abundance of great information online for anyone wanting to eliminate credit card debt and repair their credit. Do this before you pay someone else for much of the same information.
1) Credit repair companies that take money from you for the purpose of paying your creditors, but keep that money in an escrow account. This scam is very common and is in fact a huge problem for the debtor.
Here’s how this scam works: you provide money that you intend to be used by the credit repair company to pay down debts. The repair company then puts the money in the escrow account where the balance grows. The notion is that the company is to use the money to settle your debts once the account grows to the same amount as your debts. The real problem is that the company may be taking significant amounts of money from the account as an administrative fee, but meanwhile your creditors are not getting paid are increasing your interest charges, and even making legal claims against you. Your credit rating could actually be ruined by this type of credit “help”.
1) Credit repair companies that try to pressure you, make you feel your comments and concerns are not important, or want you to sign a detailed contract without making sure you understand it thoroughly. This type of company is not to be trusted; leave well enough alone and try another company until you find one you can trust.
5) Credit repair companies that claim to provide instant credit repair, despite how bad your credit currently is. This is without a doubt a misleading claim that no credit repair company can deliver on. Unfortunately, there is no way around the fact that if you have bad credit, it may take years to repair completely. It is generally best to focus you attention mostly on how to eliminate credit card debt, knowing that your credit history will improve over time as a result.
In some cases, these companies claim that they are capable of removing poor credit history from your credit report by disputing it. This is false and misleading. True and accurate information cannot simply be removed from your credit report. A credit bureau must investigate claims within 30 days, but this does not mean that the item is simply removed automatically. You should refuse to do business with a credit repair company that makes this claim.
Hopefully, these tips will help you avoid credit repair scams and allow you to properly locate companies that can truly help you with your credit card debt elimination plans.
