Credit Repair - What You Don't Know CAN Hurt You

By: Paul Jerome
Submitted: 2007-01-17 16:11:17
Print this article | Tell a friend | For publisher | Social Bookmarking
Rating:
 

The magician waves his wand and an astonished crowd sees a rabbit come out of a hat. A woman is sawed in half on stage and then magically reappears unscathed. Whether it is deception or entertainment is beyond the scope of this article, but either way I’m sure you’ll agree, that the magicians of old would rather not share their secrets lest their livelihood vanish. A parallel exists in the credit repair industry. They promise to cure your bad credit (for a fee, of course) and unlike the sawed-off woman or the appearing rabbit, nothing really happens. Your credit score remains unchanged and in many cases further disarray occurs. You might also risk a potential misreading or deliberate misrepresentation of the law by inexperienced or perhaps unscrupulous personnel who are involved in this business, thus adding to your credit woes. The purpose of this article then is to inform you how to repair your credit – without any cost, and further to make apparent what is considered illegal or at least unethical conduct on the part of credit repair companies.

First on The Federal Trade Commission’s (FTC’s) list of “tell-tale signs of a scam” is a warning to beware of “companies that want you to pay for credit repair services before they provide any services”. Receiving ‘payment in advance’ is a violation of the Credit Repair Organizations Act. Unfortunately, it seems to be a common practice among many credit repair companies who regularly collect these advance payments.

Another unsavory activity among some credit repair companies is for them to instruct you to dispute all derogatory information in your credit report regardless of its timeliness or accuracy. Their strategy is to bombard the credit bureau with these dispute letters in the hopes that these items will be removed because they are not verified in the thirty-day time frame. Not only is this strategy unethical, it’s also ineffective. The Credit Reporting Agencies (CRA’s) have created an Automated Consumer Dispute Verification (ACDV) system that is designed to speedily handle a tremendous volume of disputes. Once verified, all future disputes can be labeled “frivolous” under a provision of the Fair Credit Reporting Act (FCRA). This labeling effectively ends the investigation process by the CRA’s on your behalf.

The final topic to discuss is what the FTC refers to as “File Segregation”. This involves applying for an Employer Identification Number (EIN) from the Internal Revenue Service and then using it in place of your Social Security number to apply for credit. Misrepresenting your Social Security number is a federal crime. If a credit repair company instructs you to do this, then you could face fines or even a prison sentence.

At the risk of sounding simplistic, I must assert that the best credit repair is free – meaning you can do this yourself. No one knows your personal credit file better than you and Congress enacted the FCRA to protect your rights, not the rights of the credit repair company. All that is necessary to fix your credit is some free information and a little patience. There are some good websites that can be found on the net that have compiled free information on the subject of credit repair. Be sure that the site you choose has been updated to reflect the 2003 FACTA amendment to the FCRA.

We all want good credit. Without it, life becomes very difficult. Unfortunately, occasions arise, quite often through no fault of our own, that causes our credit standing to take a downward spin (sickness, loss of job, etc.) Many of us have been through such an ordeal and during this period, discouragement sets in. But all of us have the opportunity to repair this negative credit and we should take advantage of such an opportunity.

We hope this article will offer some practical advice in the restoration of your good credit as well as point out some of the pitfalls to be aware of in this attainable pursuit of a healthy credit life.

Paul Jerome is a mortgage expert and frequent contributor to the Broken Credit Blog. The BCB is a free website created to assist the general public with information about credit repair and responsible mortgage lending.

http://www.brokencredit.com

Article source: Expert Articles

Most Recent Articles in Credit category

  • Visa Debit Cards Gain Popularity as the Credit Crisis Continues - By: Christopher Golding
    With the credit crisis taking its toll, many people are cutting up their credit cards and electing to replace the empty space in their wallet with a Visa Debit Card.
  • Visa Debit Cards Educate College Students about Money - By: Christopher Golding
    As soon as students step foot on college campuses they are bombarded by credit card companies who have erected funky teen-targeted promotional booths, and are distributing free caps, t-shirts and water bottles all in an attempt to entice students to sign-on for their company's credit card.
  • Landlords and Investors - Why Your Credit Score Matters - By: Martin Max
    The market has housing prices at an all time low. In the last 2 weeks I've seen 3br 2ba townhouses selling for less than $95k. Additionally an eleven (yes, I said eleven) bedroom house in foreclosure listed for $159k (it sold the day after it was listed). Another example is a 5br house for $129k. These are just the ones in Southern Oregon that I found. If your not familiar with home prices in Southern Oregon, I can assure you those are all absolutely smokin deals!
  • What you need to know about credit card balance transfers - By: Mike Jarocki
    Credit cards need no introduction. Right from a student to an adult everybody uses credit card in some form or the other. A student may use the credit card to pay for his bills or for buying his necessities. An adult may use it to pay for his utility bills and other daily requirements.
  • No Pin Number or Signature Required, Just Wave! - By: Andrew Regan
    A new generation of credit cards are set to make an impact on UK consumer's behaviour, as they allow smaller payments to be charged to the card without the need for insertion into a chip and pin machine.
  • For the Best Benefits, Choose Your Next Credit Card Carefully! - By: Adam Singleton
    The benefits offered with credit card deals in recent times are becoming more sophisticated and in many cases, include multiple benefits. Read on to find out more.
  • Are Balance Transfers Always Good? - By: Mike Jarocki
    Are Balance Transfers Always Good?
  • Staying Safe With Online Bank Accounts - By: Isla Campbell
    It's not surprising that more and more people are choosing to bank online. But, you need to be aware of what you are doing if you don't want to fall victim to security issues.
  • The Evolution of Credit Cards - By: Mike Smith
    Life without credit cards is unimaginable. It is a payment system that has revolutionized the way the consumers and the service providers such as the hospitality and the retail industry communicate. Here is a detailed insight on the evolution of "plastic money".
  • Research the Current Account Market and you Could Come up Trumps - By: Isla Campbell
    Opening a basic current account is often straight forward. Offering various facilities, it allows the user to effectively manage their finances. With the rise of added-value accounts, the challenge now lies in finding the most appropriate one.