5 Tips When Choosing Credit Repair Services
The most important thing you should look for when searching for ethical credit repair services is the affiliations of the firm you are considering
. Every trustworthy agency will be eager to show you their references on request. Here are some pointers you should check out to protect yourself from fraudulent credit repair companies.
1. The company should belong to the Ethical Credit Repair Alliance (ECRA) or another reputable regulatory body. You are often advised to choose businesses that are subscribed to the BBB (Better Business Bureau) when you are looking for any type of service. When looking for credit repair companies, those agencies that belong to the ECRA are among the best choices available.
This body has its own stringent codes of conduct and any business that gets their approval will definitely give you their best services. All credit repair companies that find approval under this professional alliance will have to maintain high standards in everything they do pertaining to repair of credit. This helps to protect you, the consumer, from any type of unethical and sub-standard practices.
2. Know what credit repair is before seeking help. Most people who are cheated out of their hard earned money while they are seeking ways out of a financial jam, do not know anything about what repair of credit involves. You need to learn what these services can do for you and what they cannot do.
Only when you know clearly this difference, will you be able to identify those companies who offer you false promises. For example, no one can remove negative remarks entered on your credit report if these can be verified. You will find many such credit repair companies telling you that they can give you a clean credit report within a month or less. Think carefully; is this legally possible? If not - and it clearly is not - would you still want to pursue such unethical methods?
3. Avoid unsolicited offers you receive through email. It's not fate that sent you an email offering to repair your credit at a time when you are desperately looking for help. These are fraudulent companies who obtain your email address through various unethical methods, and are sending out millions of spam emails in the hope that they will "catch" some needy soul whom they can milk dry!
Beware of such emails. In 99.9 percent of cases these are fraudulent companies looking for their next victim. Proper credit repair companies will send their offers through newsletters or emails only after you have opted in to receive them.
4. You cannot legally create a second credit report or a "new identity." This is one huge fallacy that many people choose to believe, mainly because it would seem to solve all their problems. This belief is once again mainly because people do not understand what credit repair is all about. However, this practice - called "File segregation" - is illegal!
A credit score is an aggregate of the history of your financial behavior from the day you became an adult until the present. How can you get a second and "new" such history? And if you do so, does it seem to you like this would be legal? Do you realize now that the credit repair companies that offer you such a way out of your problems are fraudulent?
5. Demanding complete payment upfront should raise a "red flag." According to Federal Law, you need to have a detailed written contract from the agency beforehand and the payment is to be after services have been completed. In addition you have the right to cancel within three days.
Some companies may charge an upfront fee for credit report analysis or a consultation, and then charge additional monthly fees as they follow up with the credit bureaus on a continuing basis. But if a company demands their entire fee be paid in advance, they are likely doing so because they realize you will not be inclined to pay later when you discover that they cannot deliver on their promises. Such companies are fraudulent and you would do well to avoid them!
6. Repairing your credit score and credit report takes time. As explained earlier, no reputable company can improve your credit score overnight or change your credit history entered on the credit report if it can be verified.
At best the not-so-serious problems can be countered over 2-3 months time, by getting incorrect information removed from your credit report, and by improving the way you handle your finances and overall payment of bills and loans. More serious entries such as foreclosures and the like stay on your credit report for 7 years, even with the best financial management. Bankruptcies will stay on the report for 10 years. "Guarantees" that these can be removed overnight indicate fraud.
7. No contract, no pay! Many people will be saved from the pain of being defrauded if they insisted on a written contract; and according to the law, this is your right. Fraudulent companies prefer there to be no contract, and if there is one you can expect that information (such as the fees etc.) will be incomplete. You will be able to understand the nature of these companies by the contract they offer you. If for some reason a contract is not presented, continue your search for a reputable company.
8. If anything is guaranteed, beware! Not even the best and most experienced agencies can guarantee the results of their credit repair services. They can assure you - after they study your report - that they will work diligently and use every possible means to improve your credit, provided those means are legal. However, in the credit repair business there can never be any hard core guarantees in regard to results.
Unfortunately human nature being what is, people would rather hire a company that tells them what the want to hear, rather than hire a company who is telling the truth. Do not fall into this trap! Although you might rather hear promises of positive results, credit repair companies that offer guaranteed results are fraudulent.
9. Look for counseling services. Most reputable credit repair companies will offer free counseling services.
If the company that you are considering to engage does not, try looking a little deeper. It might not be a trustworthy agency. A good and trustworthy company will encourage its clients to become knowledgeable about credit repair. Their services are for those matters that require longer and more complicated interventions toward improving the credit scores.
10. Wrong advice is a red flag! There are companies who will advise you to dispute all the negative entries on your credit report claiming "this is not my account." While this may result in a higher credit score in the short term, the creditors whose remarks are thus disputed may later counter it, and the bureau will verify it with subsequent investigations.
Given the poor record keeping habits of the credit bureaus, there is a very high probability that all the details of any item on your credit report may not be accurate. But credit repair companies that advise you to claim "this is not my account" if you are certain that it is, are not to be trusted.
As you can see, there are enough red flags along the way to warn against possible fraud. The first and most important thing you should do before you seek the services of credit repair companies is to educate yourself on what "credit report" and "credit score" mean. You also need to know the minimum applicable laws before you go for any type of credit repair help. A good beginning is to visit the web sites of the FTC Bureau of Consumer Protection and the Ethical Credit Repair Alliance.
by: Jim Eastman
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