Can Credit Repair Agencies Fix Bad Credit?
Get Free Credit Report Before Starting Credit Dispute
Jun 14, 2009
It’s perhaps not unsurprising that consumers, anxious to have loan applications approved, are turning to credit repair agencies for help. However, it's easy for the unwary to be seduced by the many slick adverts that appear in newspapers, on TV and on the Internet that shout:
- “Credit problems? No problem!”
- “We can remove bankruptcies, judgments and bad loans from your credit file forever!”
- “Legally create a new credit identity”
- “We specialize in quick credit repair”
Experian, one of the three US credit reporting agencies are in agreement and say: “Some consumers pay so-called credit clinics hundreds and even thousands of dollars to fix their credit report.”
Credit Dispute Process
However, it’s worth bearing in mind that if there is a valid reason for a credit dispute, Experian, along with TransUnion and Equifax, the other two national credit reporting agencies, offer an uncomplicated credit dispute process and one free credit report a year, when asked for it.
The Federal Trade Commission highlights some of the tactics used by some unscrupulous agencies and offers some good advice to help consumers avoid them:
- No agency can remove accurate information from a credit report.
- Under the Credit Repair Organizations Act, credit repair companies cannot require a consumer to pay until they have delivered the services they promised.
- The credit repair company should not advise a person not to contact any of the three national credit reporting agencies.
- The company should not advise consumers to try to invent a new credit identity and then a new credit report by applying for an Employer Identification Number to use instead of a Social Security number.
- The company should not advise that all information, regardless of its accuracy, be disputed.
FTC also provides a timely reminder that it’s a: “Federal crime to misrepresent a Social Security number and to obtain an Employer Identification Number from the Inland Service under false pretenses.”
The advice from reputable agencies like the FTC and Experian is quite clear. If it’s a legitimate credit dispute, why pay a repair agency when the consumer can follow the same procedure free of charge. If there is adverse information on the report, only time can heal it. A credit-reporting agency can store negative information for seven years and bankruptcy details for ten years.
National Foundation for Credit Counseling
For the American consumers who are experiencing high levels of personal debt and have been tempted to apply for more credit as a way forward, it might be worth considering contacting the National Foundation for Credit Counseling (NFCC), which offers some excellent advice.
Sources:
Federal Trade Commission, Focus on Credit, Credit Repair: How to Help Yourself, October 2008
Experian Information Solutions, Can credit Repair Clinics Fix my Bad Credit?
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