Buying new furniture with a credit card, financing a car and agreeing to that variable-rate mortgage all seemed like good ideas. That is, until you couldn’t make your payments.
Now, your credit score has dropped through the floor, and it feels like you’ll never get back on your feet.
Never fear! A credit repair company can undo the damage and have your score back to near-perfect condition in no time.
Or can they?
Credit repair scams are rampant. Sure, there are some legitimate companies that will help sort out the details of your credit report, but many others are simply preying on desperate people.
Before you fork over what’s left of your hard-earned money, know that the following things you might hear from credit repair companies are all untrue.
Lie No. 1: You can start over
Wouldn’t a do-over be nice? Some credit repair companies may say you can do just that. They may say you can get a new identification number that will make it easy to rebuild credit and erase past mistakes. Some companies may refer you to the IRS website to request an employer identification number, or EIN.
The problem is that it’s illegal to request an EIN under false pretenses. It’s also illegal to lie on a loan application. And we certainly shouldn’t have to tell you that it’s illegal to use a fake Social Security number.
Lie No. 2: It’s OK to fudge your income
A sketchy credit repair company may tell you it’s OK to inflate your income on an application to boost your chances of approval. No one will ever know, they might say.
But the credit repair company is lying when it says this practice is OK. It’s not. As you may have already guessed, it’s illegal to lie about anything on a credit application.
For more sage advice on deterring fraudsters, check out: “10 Golden Rules to Avoid Getting Scammed.”
Lie No. 3: You have to pay upfront
If the first thing a credit repair company says to you is “show me the money,” you need to show it the door. You don’t need to pay a retainer or an upfront fee to use a credit repair company. In fact, the federal Credit Repair Organizations Act prohibits companies from demanding payment in advance.
What’s more, federal law requires that credit repair contracts be in writing. If a company doesn’t provide this and insists on being paid upfront, you know you’re dealing with a scam.
Lie No. 4: Only we can help you
This lie makes people think they are trapped into using a company’s service. The reality is that you don’t need to pay anyone to fix your bad credit. There is nothing a credit repair company can do for you that you can’t do for yourself.
At Money Talks News, we are always on the lookout for bad actors who take advantage of consumers. You can learn more about all manner of common scams by checking out our latest scam stories.
How to repair bad credit on your own
So, how do you repair your credit on your own? It’ll require a little work, but you can do exactly what a legitimate credit repair company would do. Even better, you don’t have to pay a dime.
First, you need to request copies of your free credit reports. You can get them through AnnualCreditReport.com. That’s the official place to request your reports, and you’re entitled to one free report from each of the three major credit bureaus — Equifax, Experian and TransUnion — every 12 months.
Other websites may try to charge you for this information. So, if you’re asked for your credit card information, you’re in the wrong place.
For step-by-step instructions for requesting your credit reports, see “How to Get Your Free Credit Report in 6 Easy Steps.”
Next, comb through those reports for any incorrect information. Did you pay off that balance? Were you only late on that account once rather than the three times reported? Circle everything that may be wrong.
Finally, send letters of dispute to the credit bureaus asking them to review the info. You can even do this online now.
If the credit bureaus side with you, the negative reports will drop off and your score will rebound. Otherwise, you’ll need to wait as long as seven years in some cases for the info to disappear.
Still feeling overwhelmed? We can also connect you with a legitimate company that may be able to help.