Credit Repair Services: Do They Really Work?

If you read the paper, watch TV or surf the Internet, you’ve seen one. An offer for credit repair services. You may have even gotten fliers in the mail or a telephone call from a credit repair firm. They all say the same thing: It’s easy, it’s legal, it’s 100% guaranteed.

Want to know the truth about credit repair services? Most of these credit repair offers are scams. In fact, according to the Federal Trade Commission, attorneys at the nation’s consumer protection agency have never seen a legitimate credit repair firm making those claims. The truth is that there really is no quick fix for credit damage. Most credit repair services offer nothing in exchange for money you can’t afford to spend.

You can improve your credit legitimately, but it takes time, effort and most importantly, sticking to a personal debt management plan.

How Can You Tell If It's a Credit Repair Scam?

Every day, credit repair firms target consumers who have poor credit histories, promising to help clean up their credit report so they can get a car loan, a mortgage or even a job. The fact is, a credit repair firm can’t remove accurate negative information from your credit report to improve your credit. It’s illegal.

If you see an offer for credit repair services, here’s how to tell if it’s a credit repair scam:

• The company wants you to pay for credit repair services before they provide anything. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
• The company doesn’t tell you your rights and what you can do for yourself for free.
• The company recommends that you do not contact any of the three major national credit-reporting companies directly.
• The company tells you they can get rid of most or all of the negative credit information in your credit report, even if that information is accurate and current.
• The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
• The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.

Warning:

If you follow illegal advice and commit fraud, you may find yourself in serious legal trouble. It’s a federal crime to lie 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. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone or Internet to apply for credit and provide false information.