Credit Repair Companies - Beware of Scams

The most important thing you should look for when searching for ethical credit repair services is the affiliations of the business under consideration. Every trustworthy agency will willingly share with you their references on request. Here are a few tips that you should keep in mind to protect yourself from fraudulent credit repair companies.

1. Check to see that the company is a member of the Ethical Credit Repair Alliance (ECRA) or a similar regulatory organization.

You It's often suggested to choose companies that are subscribed to the BBB (Better Business Bureau) when considering whether to hire a service. But when evaluating credit repair companies, those businesses affiliated with the ECRA are some of the best.

This organization requires that its members agree to a stringent code of professional ethics and the member companies will give you their best services. All credit repair companies who are members of this organization will have to maintain high standards in dealing with their clients. As a result this means protection for you from any kind of dishonest practices.

2. Educate yourself about credit repair before hiring help. The majority of those who get "taken" by dishonest companies when hiring help with their credit, do not know anything about what repair of credit involves. It's important to know what what credit repair services can do for you and what they cannot do.

Only when you have this knowledge, will you be able to distinguish those companies in which you can place your trust. For instance, no one can remove derogatory accounts on your credit report if those accounts are verified by the credit bureaus.

There are a lot of credit repair companies claiming to be able to completely clean your credit report in a very short time. Think this over carefully for a moment; can this be done without breaking the law? If you answer "No" you had best pass on their services.

3. Ignore any offers you receive by e-mail. At a time when you find yourself in financial desperation, don't think for a moment that it's good fortune that sent you such an e-mail. These e-mails are sent by scammers who obtain your email address through various unethical methods, and are sending out millions of spam emails in hopes of tricking a person in dire need whom they can scam for all they're worth!

Never be fooled by such shenanigans. Most of the time these are unscrupulous thieves looking to take advantage of the unwary. Proper credit companies will make contact with you through various media only when you have indicated you're interested in receiving them.

4. Creating a "new identity" is illegal. This is the "Big Lie" many people fall prey to, primarily because it looks like the "Silver bullet" that will resolve all their difficulties. This belief is once again mainly because people do not understand what credit repair is all about. However, this practice - known as "File segregation" - is a violation of the law!

A credit score is an aggregate of the history of your financial behavior from the day you became an adult until the present. So acquiring a "new" history is an impossibility? So if you were to attempt it, doesn't it make sense that it can't possibly be legal? Thus it's a "no-brainer" that the credit repair companies that offer you such a way out of your problems are scammer.

5. If an agency wants full payment prior to rendering any services, look out! Federal Law stipulates that these credit repair service must present you a written contract and that they cannot charge you a fee prior to completion of the services offered. You also have three days time to cancel the contract if you find it unsuitable.

An agency may charge for an initial credit report analysis and/or consultation, then continue to charge by the month as they continue to work on improving your credit. However, if you are required to pay the complete charge before any services have been rendered, it may be because they are aware no payment will be forthcoming when it becomes clear that they cannot deliver on their promises. Such organizations are not trustworthy and you should not hire them!

6. Credit repair won't happen overnight. As explained earlier, no honest agency can repair your credit overnight or remove negative information that the credit bureaus verify.

At best it takes two or three months to fix minor problems, by getting erroneous information deleted, and through improving how you deal with your finances. More serious problems like foreclosures and repossessions will remain on your report for seven years, even with excellent financial management. Bankruptcies can remain on your credit report for 10 years. Don't fall for guarantees that such items can be removed within a month or less.

7. No contract? Forget it! To avoid being scammed, make certain you are given a written contract; and according to the law, this is your right. Scammers are leery of presenting a contract, and if they do present one, there will be an absence of information on aspects of the services, the amount of the payments, and so on. You will be able to understand the nature of these companies based on the nature of their contract. If they do not present you with a contract, go find someone else.

8. If anything is guaranteed, beware! Not even the most experienced organization can guarantee the results of their service they provide. They may reasonably promise that all legal procedures will be used to improve your credit. But to guarantee results is dishonest and unrealistic.

However, the unfortunate reality is, people believe what they want to hear and prefer to hire a company who tells them as much, rather than hire a credit repair business who gives them an honest and truthful assessment of the situation. Don't fall into this error! Even though promises of results are more appealing, credit repair companies that offer guarantees regarding results are to be avoided.

9. See if there are counseling services. A good many credit repair companies offer counseling services at no charge. If the business being considered does not offer counseling services, look a bit further. It might be an organization unworthy of your trust. All agencies of repute encourage and educate people on how to repair credit. Their services are for those matters that need professional intervention to improve one's credit.

10. Wrong advice means danger! Some agencies have you dispute every derogatory account on your credit report by declaring "this is not mine.." Even though in the short term the credit score may improve, the creditors whose trade lines were disputed may later counter it, and the credit bureaus will verify it with subsequent investigations.

Because of the numerous inaccuracies in record-keeping by the credit bureaus, it's highly likely that the details of any account have inaccuracies. But credit repair companies that have you proclaim "this is not my account" if you are certain that it is, must not be trusted.

As you can see, there are plenty of warning signs to alert you of a possible ripoff. The first and most important thing you should do before you seek the services of credit repair companies is to be informed in regard to credit repair, and terms like "credit score" and "credit report". You also need to know the minimum applicable laws before you go for any type of credit repair help. A good start is to pay a visit to the FTC Bureau of Consumer Protection website and the Ethical Credit Repair Alliance.