The first thing that needs to be addressed when in need of good credit repair services is the affiliations of the agency under consideration. All established and reputable agencies will be eager to show you their references on request. These are some important issues to keep in mind in order to steer clear of scam credit repair companies.
1. The organization should have a membership in the Ethical Credit Repair Alliance (ECRA) or a like-minded regulatory body. It’s often suggested to select businesses that are subscribed to the BBB (Better Business Bureau) But if you are considering. those agencies that belong to the ECRA are most likely to be the best choices.
This body accepts only those members who agree to a stringent code of ethics and any member organization will represent the best interests of their clients. All credit repair companies that find approval under this organization must maintain high standards of ethics in dealing with their clients. This means protection for you, the consumer, from any kind of dishonest practices.
2. Educate yourself about credit repair before hiring help. Most people who are cheated out of their hard earned money when seeking assistance to improve their credit, do not understand credit repair. It’s important to know what these services can do for you and what they cannot do.
Only when you are well aware of the difference, will you be able to distinguish which organizations are reputable. For instance, no one can remove derogatory accounts on your credit report if those accounts are verified by the credit bureaus. There are those credit repair companies claiming to be able to completely clean your credit report in a very short time. Now consider carefully; can this be done without breaking the law? If the answer is negative you had best pass on their services.
3. Avoid unsolicited offers you receive through email. 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 kinds of e-mails come from fraudulent businesses who use unethical means to gather e-mail addresses, and send spam to millions in the hope that they will “catch” some needy soul whom they can scam for all they’re worth!
Steer clear of these. In the vast majority of cases these companies are ripoff artists looking to profit from people’s desperation. Honest credit companies will make contact with you only when you have asked to receive them.
4. You cannot legally create a second credit report or a “new identity.” People are far too eager to believe in this fallacy, mainly because it would seem to solve all their problems. This is so easily believed because, again, most people do not understand credit repair. This method is called “File segregation” and it’s most definitely illegal!
Your credit score is a summation of your credit history that goes back to the time you first became an adult. Thus, it’s just not possible to get a “new” credit history. So if you were to attempt it, doesn’t it make sense that it can’t possibly be legal? So it’s easy to see that the credit repair companies that offer this “solution” are not legitimate.
5. Demanding full payment upfront is a warning sign. The Credit Repair Organizations Act (CROA) stipulates that the agency must provide you with a written contract and the payment is to be after services have been completed. You also have three days time to cancel the contract if you find it unsuitable.
A credit repair business can ask for an upfront charge for initial services, such as a credit report analysis, and thereafter charge monthly fees as they continue to work on improving your credit. But if a company demands their entire fee be paid in advance, chances are the reason is because they realize you will not be inclined to pay later once you know that they cannot deliver on their promises. Such organizations are not trustworthy and you should not hire them!
6. Credit repair takes time. As stated previously, no honest agency is able to fix credit in a short time or delete derogatory accounts from your credit report if it is verifiable.
At best the not-so-serious problems can be countered over 2-3 months time, by removal of mistakes, and through timely payments on your loans. More serious derogatory items such as foreclosures and the like stay on your credit report for 7 years, notwithstanding the best management of your finances. If there are bankruptcies, they will be there for 10 years. “Guarantees” that these can be removed overnight means fraud.
7. No contract, no deal! Many people will be saved from the pain of being defrauded if they insisted on a written contract; by law you have the right to insist on a written contract. The ripoff artist are opposed to offering a contract, and if they do present one, there will be an absence of information on various aspects of the services to be provided, the amount of the payments, and so on. You will acquire an insight into these agencies by the contract they offer you. And if they do not offer a contract.
8. If a company makes any guarantees, do not trust them! Not even the most experienced organization will guarantee results of their service they provide. They can assure you – after they study your report – that they will improve your score by any available legal means. But to guarantee results is dishonest and unrealistic.
Unfortunately human nature being what is, people would rather hire a company that tells them what the want to hear, rather than hire a credit repair business who gives them an honest and truthful assessment of the situation. Do not fall into this trap! Even though you would prefer to hear about guaranteed results, credit repair companies that offer guarantees regarding results are to be avoided.
9. Look for counseling services. Many quality credit repair companies offer counseling services at no charge.
If the company that you are considering to engage does not, try looking a little deeper. It may be a less than trustworthy company. Reputable companies will educate their clients about repairing credit. The role of the company is to perform the services that are for those matters that need continued and persistent follow-up to effect the best results.
10. Bad advice? Beware! Some organizations will dispute every derogatory account on your credit report stating “this is not mine..” Although the short-term results may be impressive, the creditors whose entries had been disputed may later counter it, and at a later time the credit bureaus will verify it.
Given the poor record keeping habits of the credit bureaus, the probability is very high that there are inaccuracies on your credit report. But credit repair companies that tell you to state “this account is not mine” although it really is, are not worthy of your trust.
As you can see, there is no shortage of red flags to alert you of a possible ripoff. The first thing you must do when you seek to hire credit repair companies is to do your “homework” and learn about credit repair, what it is, what to expect, and what to avoid. You also need to know the minimum applicable laws before looking for a credit repair company. A good start is to pay a visit to the web sites of the FTC Bureau of Consumer Protection and the Ethical Credit Repair Alliance.