The
Credit Repair Scam (FTC)
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 fees, these companies do nothing to
improve your credit report; most simply vanish with your
money.
Free Annual Credit Report
The Warning Signs
If you decide to respond
to a credit repair offer, look for these tell-tale signs
of a scam:
- companies that want
you to pay for credit repair services before
they provide any services.
- companies that do
not tell you your legal rights and what you can do for
yourself for free.
- companies that
recommend that you not contact a credit reporting
company directly.
- companies that
suggest 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.
- companies that
advise you to dispute all information in your credit
report or take any action that seems illegal, like
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 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.
Under the Credit Repair Organizations Act,
credit repair companies cannot require you to pay
until they have completed the services they have
promised.
The Truth
No one can legally remove
accurate and timely negative information from a credit
report. The law allows you to ask for an investigation
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.
Credit Repair Guide (FTC)
