Two Common Credit Repair Scams
A Credit Article Contributed by Augusta Wilson
What is Credit Repair?
In order to understand how to avoid credit repair scams, you must understand what credit repair is, and how it works.
Whenever you make a payment on your credit card accounts, or pay back an auto loan, or even pay your phone bill, this information is then reported to one- or more- of the three main credit agencies, TransUnion, Equifax and Experian. Unfortunately, though, because of economic hardship, such as unexpected medical bills, or a job loss, maintaining a good credit score is not always possible.
It's easier to fall behind in your payments than you may think: first, you miss one payment, resulting in a late payment slapped on top of your next monthly payment, which is now doubled. Before you know it, you're in trouble. Don't panic! There are numerous companies out that that will help guide you to develop good financial habits, many of which are not-for-profit. Some agencies will charge you a fee for their services, while others will promise you their credit repair services for free.
Credit Repair Scams to Be Aware Of
Sadly, though, with more and more debt management companies offering credit repair services, there has been an increase in scam activity. Here is a brief guide to the most common types of credit repair scams and how to avoid them.
One of the most common debt repair scams is the promise of a new credit identity, especially if you have recently filed for bankruptcy. Perpetrators of this form of credit repair will try to convince you that you can easily shed your past credit history, simply by obtaining a new credit identity. This is usually achieved by getting an employee identification number,and then substituting it for your social security number on future credit or loan applications.
However, what these companies fail to tell you is that this is completely illegal. There is really no way to erase your past credit history without hard work and a little time.
Another common scam involves companies that simply do not deliver what they promise. Under the Credit Repair Organizations Act, companies can not ask for payment until they provide the services promises. Generally, these companies will not deliver on their promises. Remember, other than providing you with a credit report, they can't do more much more than give you advice, and remember, no one can make your credit history disappear or raise your credit score.
Additionally, you should be very suspicious of any credit repair or debt management company that tells you not to contact any of the three main credit agencies yourself. You have every legal right to request a copy of your credit report; if a company tells you otherwise, it means that they most likely plan on lying to you about your credit score in the near future. Such companies will do nothing more than simply disappear with your money.
So, What is the Best Way to Repair My Credit?
Simply put, the best way to repair your credit is through honest hard work, with disciplined financial action, like making your future payments, and a little bit of time, for your credit score to begin to reflect your commitment to repaying your previous debts.
