desperate either to reestablish their credit or to get rid of the
debts they have so that they can begin again. It's easy to get taken
in by these scams, thinking they can help you. They make promises of
removing bad credit from your credit report and then providing a new
one that has good credit without the bad. Many of these companies want
you to pay them up front before they do anything for you, a red flag
from the start. There is no legal way to remove accurate information
from your credit report, and you can remove inaccurate information
just as easily as a credit repair company can at a fraction of the
cost.
Are there legitimate credit repair companies? Perhaps there may be but
they can do no more for than you can do yourself. A good many of them
are scams and ask you to do any number of illegal things such as
creating a new identity by applying for a Federal Identification
Number instead of a Social Security Number of advising you not to
contact the credit bureaus directly. It is illegal for anyone to
advise you to apply for an Employer Identification Number and you can
face charges with the Internal Revenue Service if you do so. They
might also tell you to dispute everything that is in your credit
report whether it is legitimate or not.
One of the things to keep in mind about credit repair is that you can
only repair those items that are on your credit report erroneously or
lack evidence to support them. Instead of spending money on credit
repair and probably never seeing anything, take the money and work
with the creditors to legally remove things from your credit file. In
some cases if an account is paid in full, a creditor will agree to
submit a request to the credit bureau to remove it.
For some people credit repair is a step use to avoid bankruptcy. What
you have to understand is that even if the account is removed from the
credit bureau files, it is still in the files of the creditor. Of
course, this may also be true if an account is over seven years old,
but in that case the creditor cannot legally attempt to collect the
debt. At the same time, if you apply for more credit with that
creditor, they can use that as leverage toward granting or denying a
new loan. The law does not prevent a creditor from collecting on an
old loan; it only says a creditor cannot assume any collection
procedures after seven years.
The Credit Repair Organization Act clearly defines what a credit
repair company can and cannot do, one of which is they are prohibited
from making false claims about their services. It also mandates they
must provide a contract that lists what services are provided and the
cost of each as well as a total cost. If you contract with a credit
repair agency, make sure they follow the law and provide you with
their total cost for services and don't expect payment before the work
is completed.