Scams in the Credit Repair Service Industry

A Credit Article Contributed by Mark Mcclelland

What Does a Credit Repair Service Purport to Do?

Basically all credit repair service companies claim to do the same thing: restore your good credit rating even if you accurate, legitimate, and timely negative information in your records. Oh, and they guarantee the results as well.

They all charge up front fees for something or another, your 'credit analysis', or to start the "program', or some such. Often they claims like:

'Repair your credit, guaranteed, or you get you money back'

or

' We can legally increase you credit rating score, guaranteed'

or

'Bankruptcy" No problem, we can get it, as well as judgments, liens, and any other negative information removed from your credit files permanently'.

What are the Favorite Credit Repair Service Scams?

The scam is that all of these claims are either patently false, or they're something you could do yourself for free.

They promise that after you cough up some up-front they'll clean up your credit files so you can continue living the good life, not worrying about what got you into that situation to begin with. Then, after months of waiting, and perhaps after paying them thousands of dollars in additional fees, they either fail to come through - simply saying that it can't be done, or they vanish altogether, along with your money.

Are There Any Signs That Should Warn Me off a Specific Credit Repair Service Company?

There actually are several key warning signs that indicate the credit repair service company you're considering using might not be on the up-and-up:

1) The service tells you that you'll have to pay up-front before they actually provide you with any of their services - according to the Credit Repair Organizations Act, credit repair service companies cannot obligate you to pay any fees or charges until they've actually completed the promised services.

2) Don't tell you what you should be able to do yourself for free - any company that doesn't tell you what other options are available to you is probably not one you'd want to deal with anyway. How can you trust them if they omit important information during your preliminary discussion?

3) Tell you to let them deal with the credit reporting agencies, and not to contact them yourself - no legitimate company would tell not to do something that you have very right to do, and should do in any case.

4) Suggest that you try anything that sounds fishy or illegal, like creating a new credit identity by applying for and using an Employer Identification Number - in this business, if it sounds fishy it's probably illegal.

The fact is that if you do anything illegal, and thus knowingly or unknowingly commit some act of fraud, you can be charged with mail or wire fraud. For example, if you mail in a credit application, or apply over the phone, provide false information, you're likely to be charged with fraud. The Fed's don't look kindly upon folks that make false statements on loan or credit applications, juggle digits in their Social Security Number, or obtain an Employer Identification Number from the IRS under false pretences. So, if you're going to do it, make sure you do it right.