Credit Repair Scams

How can you recognize credit repair scams? Is there a way to decipher what is real and what is not? Yes, there is a way to tell and we are here to help you do just that. Let’s delve into what to look for that tells you which companies are really credit repair scams.

Clear up your credit report. We can remove all negative items. Get good credit again! How many times do you see this in print and sometimes on TV? These are definitely credit repair scams. How do we know this? In this case it is easy to tell. Nobody can legally remove a legitimate item from your credit report -- except the original lender. Anyone claiming to be able to remove negative items from your credit file, and give you good credit report is lying to you. Never pay anyone to do this. You can get your own credit report -- at most it will cost you $30 to get a copy from all 3 major bureaus. Then you can dispute incorrect items and pay down or pay off items that are legitimate but adversely affect your report. All of this is done for free by you. There is no need to pay someone to do this. The worst part about this type of ad is that they will usually just take your money and run. This leaves you with your bad credit and an empty wallet. Be sure to avoid this type of scam. The warning sign here is the wording. Steer clear of this type of company.

Another credit repair scam is seen on TV all the time. You have what appears to be a caring individual talking to you about your credit card problems and your high debt. They say that they will work with your creditors. At the end, the person thanks the company for helping them. This too is a credit repair scam. These companies are actually collection agencies. What they do not tell you is that they are working for the creditors, not you. They will talk to your creditors and maybe get the interest removed or reduced; some of the creditors may actually take a reduced payout amount in order to guarantee some type of payment from you. Here is the down fall. First, they are not being honest about who they are. Companies that misrepresent themselves bother me. If they cannot be honest about whom they are and what they are really doing, how can you trust them to help you. Next, they are working as debt collectors. This means that they are going to advise you to do everything in order to make the payment to them. They do not care that you may need groceries or that you may have to pay a mortgage and utility bills. Never allow this type of company to have control of your current ongoing payments. If you have a mortgage, and gas & electric, a phone, and taxes, etc., do not give them control over these items, especially if your rent or mortgage is current. You pay them a lump sum and they are supposed to distribute this money to your creditors as well as take a cut for themselves. Oh, didn’t I mention that? You pay them to collect the debt for the creditors. The creditors do not pay them like in a standard collection agency. That’s why a lot of creditors will reduce the amount owned slightly for them. It is still less expensive than using a traditional collection agency. These types of credit repair scams are the worst. They are believable. An offer to help you manage your debt is very attractive to those in financial trouble. This type of company preys on those who cannot afford to make further financial mistakes. What services they offer, you can do yourself with a little planning. Get your debts together and add up the total amount due for each past due account. Talk to each creditor. This will take time but you can do it. Ask them to reduce or eliminate ongoing interest if you cut up the card and send it back to them. You will also need to make arrangements to pay them. Be clear on what you can really afford. A lot of companies will work with you, especially if your financial difficulty was due to an unforeseen hardship like a layoff or an illness. If you need to work with your mortgage lenders, be sure to talk to someone in their loss mitigation department. They don’t want to foreclose, that gets very expensive to do.

Beware of those empty promises. Keep your money in your pocket. Put some time and effort into resolving your debt situation by yourself. If you really need help, seek out a credit counselor. Many can be located online now.. These services help you learn money management skills; they do not help you repay your debts. This is a better investment than throwing your money away on credit repair scams.