When you see promises such as, "We can fix your credit in 48 hours! We guarantee it!" you need to be skeptical. There are some repair companies that prey on the vulnerability of those who are desperate to fix their financial lives. It might sound like it's just what you need, but there are limitations to what a repair company can do for you. And the service they offer isn't free.
Aside from making exaggerated claims about what they can accomplish, some credit repair companies use illegal tactics. For instance, they might encourage you to apply for an Employer Identification Number and tell you to use that instead of your Social Security Number (SSN) when applying for credit. This makes it appear as if you're new to credit and it effectively "hides" your past history.
They might also try to sell you a new SSN. Don't fall for these scams. You could end up in prison or with steep fines if you attempt to hide your identity to obtain credit. Yes, lying on credit applications is a very big deal.
Other signs you're dealing with scammers:
- They tell you not to contact the major credit reporting agencies.
- They encourage to dispute negative--but accurate--information on your reports.
- They want to be paid before they do any actual work on your behalf.
- They don't take time to tell you what your legal rights are.
It's important to know how to identify scams so you can protect yourself. While there are many scams out there, not all repair companies are out to take advantage of you. Even if you don't see any warning signs, don't agree to work with them until you do some research about the company. Check out the company with your state Attorney General's office to find out if there are any complaints about the company on file. And see what reviews they've received by the Better Business Bureau.
Are these repair services effective?
If you work with a legitimate company, it's possible they'll be able to remove negative items that are proven to be inaccurate. Many of these companies--and their customers--seem to count "deletions" when they talk about success. If you got, for instance, three out of four negative items on your report deleted, then that is considered successful.
Now, can they also fix your bad credit score in 48 hours? Absolutely not. No one can do that. What you can hope for is to have incorrect items removed on your behalf. This will save you time, but not money. So make sure the cost is worth it to you.
How much money are we talking about? The cost varies widely, but expect to pay around $60 to $100 per month, depending on the level of services you decide to go for. And there are often "initial fees" you have to pay as well. Overall, you can expect to pay the initial fee plus about six monthly payments.
Can you do this repair work yourself? Why yes, you can!
You can remove incorrect items for free
It takes time and attention to detail, but no one is a better advocate for your rights than you are. So take charge of your credit life and make sure your report is clean as a whistle. You can do this yourself and you can do it for free by following instructions on the Federal Trade Commission's website.