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You see the advertisements in newspapers, on TV, and on the
Internet. You hear them on the radio. You get fliers in the mail. You may even get calls
from telemarketers offering credit repair services. They all make the same claims:
- "Credit problems? No problem!"
- "We can erase your bad credit -- 100% guaranteed."
- "Create a new credit identity -- legally."
- "We can remove bankruptcies, judgments, liens, and bad
loans from your credit file forever!"
Do yourself a favor and save some money, too. Don't believe
these statements. Only time, a conscious effort, and a personal debt repayment plan will
improve your credit report.
The following explains how you can improve your credit
worthiness and lists legitimate resources for low or no-cost help.
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CREDIT REPAIR COMPANIES
Everyday, companies nationwide appeal to consumers with
poor credit histories. They promise, for a fee, to clean up your credit report so you can
get a car loan, a home mortgage, insurance, or even a job. The truth is, they can't
deliver. After you pay them hundreds or thousands of dollars in up-front fees, these
companies do nothing to improve your credit report; many simply vanish with your money.
The Warning Signs
If you decide to respond to a credit repair offer, beware
of companies that:
- Want you to pay for credit repair services before any
services are provided;
- Do not tell you your legal rights and what you can do --
yourself -- for free;
- Recommend that you not contact a credit bureau directly; or
- Advise you to dispute all information in your credit report
or take any action that seems illegal, such as creating a new credit identity. If you
follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud
if you use the mail or telephone to apply for credit and provide false information. It's a
federal crime to make false statements on a loan or credit application, to misrepresent
your Social Security Number, and to obtain an Employer Identification Number from the
Internal Revenue Service under false pretenses.
Thanks to the new Telemarketing Sales Rule, it's also a
crime for telemarketers who offer credit repair services to require you to pay until six
months after they've delivered the services.
The Truth
No one can legally remove accurate and timely negative
information from a credit report. But the law does allow you to request a reinvestigation
of information in your file that you dispute as inaccurate or incomplete. There is no
charge for this. Everything a credit repair clinic can do for you legally, you can do for
yourself at little or no cost. According to the Fair Credit Reporting Act:
- You are entitled to a free copy of your credit report if
you've been denied credit within the last 30 days. If your application for credit,
insurance, or employment is denied because of information supplied by a credit bureau, the
company you applied to must provide you with that credit bureau's name and address.
- You can dispute mistakes or outdated items for free. Ask the
credit reporting agency for a dispute form or submit your dispute in writing, along with
any supporting documentation.
Clearly identify each item in your report that you dispute,
explain why you dispute the information, and request a reinvestigation. If the new
investigation reveals an error, you may ask that a corrected version of the report be sent
to anyone who received your report within the past six months. Job applicants can have
corrected reports sent to anyone who received a report for employment purposes during the
past two years.
If the reinvestigation does not resolve your dispute, have
the credit bureau include your version of the dispute (up to 100 words) in your file and
in future reports. Remember, there is no charge for a reinvestigation.
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