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Reality Check - The Credit Repair Scams


Reality Check - The Credit Repair Scams

A recent poll shows that credit debt is a taboo topic in American culture. Most adults understand that having credit is important and has a direct impact on your access to things like better deals on loans, waived fees, and even qualifying to rent or buy a home. A lower credit score can end up costing you more money – and in more ways than one.

Credit repair companies exist to exploit the desperate need to access better credit and financial reporting by any means possible. Most credit repair companies target those with lower scores and negative accounts on their credit history by promising a quick fix.

The scheme

According to the Federal Trade Commission, credit repair scams target those that have overwhelming amounts of loan and credit card payments and debts and are concerned about the impact of their credit scores. Self-proclaimed savvy credit repair scammers claim to remove negative information from consumer credit reports, whether the negative information is accurate or not. These companies are charging consumers anywhere from hundreds to thousands of dollars over the course of a few months and tend to provide little to no results.

The hard truth

Credit repair companies often fail to tell their customers the rights that they have when it comes to their credit reporting. While these laws indeed exist to protect consumers, they only require credit bureaus to remove information that is not accurate or that they cannot prove belongs to you. Negative information relating to late payments, debt that is owed, etc. can remain on your report – if it is accurate and the credit bureau has proof it belongs to you.

When you see something on your report that doesn’t look correct (i.e. a late payment that you know you made on time, a charged-off account that you’re still making up-to-date payments on, someone else’s credit information), you can send a dispute letter directly to the bureau that is reporting this misinformation. The credit reporting bureau in question must then either prove the information is correct or remove it from your report within a certain number of days.

Whether your credit score is 350 or 750, you do not need to pay a credit repair bureau to dispute inaccuracies on your report and increase your credit score.

Beware the signs of scamming

If a credit repair contacts you, these actions could signify that they are scammers:

1. They promise to get any information that is hurting your credit score removed from your report. Accurate data cannot legally be removed from your reports, but inaccurate information must be removed if it cannot be proven.

2. They pressure you to pay hefty fees so they can work their magic on your credit. The Credit Repair Organizations Act requires credit repair companies to complete all services before receiving payment. Additionally, Telemarketing Sales Rule states that a credit repair company conducting services over the phone cannot receive payment until at least six months have passed and you have received a credit report that shows they delivered the services and results that you wanted. Any upfront fees or payments made for credit repair services is illegal, whether it is collected in a lump sum or monthly fee.

3. They don’t want to tell you that you can do this on your own and keep you at a distance throughout the process. Once you realize that you can do what they do, they know they’ve lost a client and cash in their pockets.

4. They fail to inform you of your legal rights. These companies will fail to inform you that you can receive a free report of all three major bureau credit scores annually. You also have the right to cancel your contract for any reason within three business days of signing up at no charge – something that often goes unmentioned.

CredKred – a safer, cheaper, and easier solution.

Just because credit repair scammers exist, does not mean that there are no safe, reputable options for credit counseling. There are many companies that exist to help guide you through the process in a legal and efficient way.

If you are struggling with low credit scores and inaccurate information on your report, CredKred can provide you with simple tools to use to generate dispute letters for almost any situation. These auto-generated letters are updated using citations from the federal statutes that exist to protect consumers from credit predators. No middle-men or scamming. You enter your own information and handle distribution privately. Plus, CredKred users gain access to information on how to grow their financial situations and avoid credit repair scams.

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