There has been an onslaught of credit repair scams taking place thru-ought the nation…both online and offline. Scam artists promise to remove negative items off your credit report, and in return you pay them monthly fees for their service. In most cases, the credit repair scammers justify their service by charging you what seems to be small monthly fees, but in the long run, you will end up paying much more than you would expect.
Imagine this…the credit repair company charges you $70 per month, but they PROLONG their service as much as possible by ONLY disputing a few negative items per month. Let’s say you have around 10 derogatory items on the three major credit bureau reports (Experian, Equifax, Transunion)…that’s 30 total items to remove. If the credit repair service ONLY disputes 5 items per month, that’s a total of 6 months for the FIRST round of disputing. And in most cases, the credit bureaus will deny the requests, and it could take another 6 months for the credit repair service to submit the SECOND round of disputes.
So what seemed to be a small monthly fee to repair your credit could easily turn into a few thousand dollars in fees. And to make matters worse, these credit repair scam artists will NOT be able to remove more than 60% of the negative items on your report (typical deletion success rate of most credit repair companies). Why? Simply because they don’t have the insider knowledge to remove major derogatory items. Sure anyone can delete minor items like a 30-day-late or credit inquiries, but 98% of credit repair companies cannot remove the major stuff like bankruptcy, foreclosure, repossessions, judgments, and liens…although they will almost always say that they can.
How to Avoid Credit Repair Scams
First, know who you’re dealing with, and fully understand what is included with the credit repair service. Do a search on the internet to see if the company has any complaints or legal issues. Also go to the Better Business Bureau’s website to see if they have a positive rating…or any negative information on the company.
Second, the service provider should have a rock solid guarantee. Make sure to read the fine print…most credit repair services offer a money back guarantee, but what they don’t tell you is that the guarantee is CONDITIONAL. And believe me, the conditions they require are designed in THEIR favor! Find a credit restoration company that offers an Iron Clad 100% Guarantee…not just a partial guarantee like the rest.
Also, the service provider should guarantee or at least warranty the PERMANENT removal of negative and derogatory items. Many times you find that inferior credit specialists will get lucky, and temporarily remove the bad stuff, only to have it come back on your credit report. Negative items may temporarily disappear as the credit bureaus investigate the disputed item, but it will most definitely pop back up on your credit record once the investigation is completed. This is another way that credit repair scams take advantage of a loophole in the system, and justify their service fees.
Third, make sure the credit restoration company has been in business at least a couple of years. Many “fly-by-night” credit specialists claim to know what they are doing, but the truth is…anyone can learn the credit repair business within a couple of days. However, if the service has been in business for a few years, chances are they have helped enough customers to know what they are doing. And you will get a chance to see their track record or any complaints against them.
Fourth, get a referral from someone you trust. If you are trying to get a loan, ask the loan officer if they can refer you to a credit repair service that they can PERSONALLY endorse. This way, you can be certain that they will not recommend a shady or questionable service. If you are looking to buy a car, ask the finance manger for a recommendation. If you are applying to rent a home, ask the property manager if they can point you in the right direction. The main idea is to find a credit restoration specialist that has SUCCESSFULLY helped a “real-live” person to clean their credit.
Fifth, if a credit repair company promises to create a new identity for you, run the other way! Seriously, although this may be very appealing especially if you’re in a difficult situation, this is also highly illegal. You could go to prison if the Feds find out that you were involved in fraud against them.
Sixth, make sure you have a legal contract with the credit repair company. The contract should be easy to understand, and NO FINE print crap! Read everything before signing, and question them with your concerns. Most honest credit repair companies will give you enough time to review the contract, and submit when you’re ready. If you find the person is very pushy or in a rush to sign you up, this is a good indication that they don’t want you to read and/or understand the fine-print.
As mentioned earlier, more than 98% of service providers are credit repair scams looking to take advantage of people who desperately need to have their credit restored. Don’t be one of the suckers that gets taken by a credit repair scam!
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