In this consumer alert we will discuss Credit Repair Scams and the different ways you can protect yourself from being taken by con artists.
If you are looking for a way out of your bad credit problems, companies claiming that they can repair or hide your unfavorable credit information may sound appealing. Credit repair companies typically charge from $50 and up, but often do very little or nothing to repair your credit history. If you are considering taking steps to improve your credit report, please consider the following:
Accurate Negative Credit Information Cannot be Erased: If a credit repair company tells you that it will be able to remove negative information on your credit report, the company is not telling the truth. Idaho law now requires all companies making credit claims to be licensed by the state through the Department of Finance.
The 7 year & 10 year rule: All credit information which is reported within the 7 years or 10 years if the information relates to a bankruptcy, cannot be erased from a credit report. The only information which can be changed are items which are incorrect or wrong, or are beyond the 7 year or 10 year reporting period rule. If you have a poor credit history, time is the only thing that can heal your credit report.
Hiding Bad Credit is Illegal: Some credit repair schemes promise you that they can “hide” bad credit by helping you to establish a new credit identity. If you pay a fee for such a service, the company may direct you to apply for an Employer Identification Number (EIN) from the Internal Revenue Service, and to use the EIN in place of your social security number when you apply for credit. You may also be instructed to use a new mailing address. This practice, known as “file segregation”, and is a federal crime.
Cleaning up Your Credit History Yourself: Anything a credit repair company can do, you can do yourself. All you do is contact a local credit bureau and request a copy of your credit report. Credit bureaus are required by law to share any information they have on file about you, although they may charge you a small fee for obtaining a copy.
However, if you have been turned down based on your past credit history, you have the right to obtain a copy of your credit report at no cost.
What to do next: Review your credit report in detail for mistakes or anything beyond the 7 and 10 year reporting rule. If there are mistakes, contact the credit bureau and provide as much information as possible about the inaccurate information on the report. The credit bureau must re investigate the matter, and delete or correct any information which they are unable to verify. If the dispute still exists, you can file a written explanation, which the bureau must include in your credit report.
This information will assist the next person who reads your report, and may be the difference between granting or denying credit based on your current credit history.
Research The Companies: If you do use a credit repair company, contact consumer agencies such as the Attorney General’s Office, and local consumer agencies in the area where the company is located to determine if there are complaints or legal actions pending against the company.
Checking Your Credit History Annually: The experts advise that you should obtain a copy of your own credit history annually just to make sure no one else has assumed your identity. It is also a good idea to check for reporting errors that may have been added to your report.
Also be very careful what you discard, someone may be going through the dumpster and finding more about you than you know. If you must dispose of financial information, burn it yourself. It makes a wonderful fire starter and feels good on a cold winters day. If you become defrauded: If you believe you have been a victim of a fraudulent Credit Repair Scam report it to the Attorney General Office’s Consumer Protection Unit.