4 Ways to Detect a Credit Repair Scam
The Federal Trade Commission is charged with the enforcement of consumer protection law and has the responsibility of shielding you and me against unscrupulous companies that attempt to get our business through false claims, illegal services, and improper disclosure. With regards to shady credit repair clinics, practices like this became so pervasive that a federal law was passed to clearly outline how credit repair organizations can operate. The Credit Repair Organization Act (CROA) was passed to protect consumers and provide them with recourse if they are a victim of a dishonest credit repair company.
When researching credit repair services, there are some key indicators alerting you to stay clear. According to the FTC, avoid credit repair services that:
Request Payment Before Services are Performed – Credit repair providers should not request payment they have worked on your case. Under the Credit Repair Organizations Act, these companies cannot require payment until they have completed the services promised.
Do Not Disclose Your Consumer Rights – Trustworthy credit repair companies will inform you that you can order one free copy of your credit reports every 12 months from each of the credit bureaus, and that you are able to dispute questionable items on your own, free of charge. If a company does not provide you with this information, specifically in the form of a CROA required written disclosure titled “Consumer Credit File Rights Under State and Federal Law”, take your business elsewhere.
Advocate Creating a New Identity – Some sketchy credit repair companies will go so far as to advise you to create a new credit identity by creating and using an Employer Identification Number (EIN) in place of your Social Security number on credit applications. This is a serious crime and if any credit repair company suggests this as an option, run the other way.
Lie About Services They Provide – Watch out for credit repair companies that guarantee to remove negative and accurate items, such as late payments and foreclosures, from your credit reports. No one can guarantee that items will be removed, particularly if the items are true.
Filed by creditrepairinfo at January 13th, 2010 under Credit Repair
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