Top 3 Myths of Credit Repair and Credit Repair Companies

When it comes to considering the use of credit repair organizations (CROs), generally, if it sounds too good to be true, then it could be a scam. Case in point: many individuals with damaged credit reports and subpar credit scores are desperate for financial help, scouring the internet for credit repair companies: 1) to help rid themselves of bad credit marks; 2) to increase their FICO scores; and more importantly 3) to get them back on solid financial footing. Realistically, any company or firm claiming to completely erase your bad credit marks, create a new credit identity or remove bankruptcies, judgments and liens from your credit files is a scammer. To avoid being taken for your hard earn monies, the list below highlights the top three credit myths these con artist use to bilk U.S. consumers out of millions of dollars each year.

This is a big fat lie! If any CRO is making such a claim, they are indeed a bogus operation and will take your money and provide nothing in return. The simple truth is that no one can legally remove accurate negative information from your credit report. Credit reporting agencies are obligated under the Fair Credit Reporting Act (FCRA) to correct or delete “inaccurate, incomplete, or unverifiable information, usually within 30 days.” They are not required to remove accurate information unless it has fully reached the seven year mark, thereby rendering the negative trade line obsolete. The real truth about disputing is as follows:

• You have a right to a free copy of your credit reports, at least once a year, at annualcreditreport.com.
• You have a right to dispute any item on your credit report you feel is inaccurate, including misspelled names, addresses and items that have reached the seven year mark.
• You have a right to dispute this information all by yourself without the use of a credit report agency or an attorney.

A common, but very illegal tactic employed by many CROs is called 'file segregation.' Over the years, there have been a bevy of fraudulent companies advertising such a thing over the internet, radio, and TV, making the fraudulent claim of using 'legal forms from the federal government' to exercise your 'one-time right' to apply for a new Social Security number. Not only is this a scam, but is considered fraud against the U.S. government. If you fall victim to this scam, the caveat emptor is very obvious: “you could be liable for very hefty fines and subjected to substantial prison time.” Who needs that right? In fact, any CRO promising to give you a new identity and a clean credit history should be avoided at all cost—they’re shams.

Perhaps the greatest of the all credit myths perpetrated by these fraudsters is the very idea that you can’t contact any of the credit bureaus on your own. This is a flat-out lie and another attempt by crooked CROs to steal your hard earned money. The real truth about credit repair is as follows:

• You have the right to dispute any inaccurate or incomplete information on your credit report.
• Credit reporting agency must investigate every dispute without charge to you.
• Anything a CRO can do for you legally, you can do for yourself at little or no cost.
• Repairing your own credit is the best way to truly learn how the system works.

The obvious answer is to save yourself both time and money by repairing your own credit. However, if you don't feel you have the time to do this on your own, and are overwhelmed by the process, or if you just want to turn the whole thing over to professionals, there are numerous reputable non-profit credit counseling organizations, which can help you devise a plan for managing your finances and improving your credit. The National Foundation for Credit Counseling (NFCC) is a nonprofit credit counseling network which can refer you to such an organization.

Although, most financial pundits would advise against the use of a credit repair organization, the simple fact is that for some people time isn't of the essence. Perhaps you're strapped for time--or is it simply a case of not having the right knowledge? Whatever may be the reason, if you're thinking of using a credit repair organization, then it pays to do a little research on the companies first. By in large, there are a decent number of credit repair firms who tend to provide a valuable service to the community at large. Notwithstanding, there are a few that's just in it for the quick buck. Buyer beware!