Debt is a hot-button issue in today's society.  Your credit score is one of the most important numbers in your life and is a major player in any financial move you make.  If you are planning to buy a Chapin, SC home, but your credit score is low, you may be tempted to try one of the many online credit cleaning companies that flashes across your screen.  DON'T!  These companies often engage in illegal practices and can cause more problems than they fix.  Read through today's article to get some helpful tips on how you can self-help your way to better credit.


Credit Cleaning Companies: Illegal!


The internet has made so many goods and services available, it’s hard to keep up. Books, music, stocks, education — and the latest internet pitch: “Remove poor credit from your credit report immediately and permanently!” Can it be true? Is it this simple? Is it legal? Is it expensive?


The answers: No. No. Definitely not. And absolutely.

 


Ten state attorneys general offices, 29 better business bureaus, and the National Foundation for Credit Counseling recently went web surfing and found almost 200 web sites that make the above claims. Their objective was to examine the advertising claims of the companies. The Federal Trade Commission emailed the sites to let them know that they were under investigation, and that their claims may violate federal and state statutes. In the email, the FTC stated: “If your company engages in any deceptive or fraudulent credit repair activities, we strongly urge you to stop; otherwise, you may be subject to legal action.” According to the FTC, many of these so-called credit repair companies “guarantee” that they can expunge negative information from credit reports, even if the information is accurate and timely. Not only is this claim false, but it may cost clients hundreds, even thousands, of dollars — and place them in jeopardy of committing a felony.

 

The Tactics…

The credit cleaners take advantage of a practice known as “spamming” — sending out thousands of unsolicited emails to unsuspecting consumers. Their pitches are hard to resist, with lines like "Erase your Bad Credit!" "You'll have new credit in no time," "Start over with a clean slate.” “It’s 100% LEGAL,” or “It’s not only legal, it’s your right.” What they don’t tell you is that the only way to erase bad credit is with time and effort, and that what they propose is not only illegal, it’s a felony with jail time.


Credit cleaners depend on people’s desperation and lack of education. One of their most common “strategies”: they advise their clients to apply for a new Social Security Number. Just so there’s no misunderstanding here — it’s against the law to apply for a new Social Security number to create a new identity, no exceptions. Another scheme they advise is to obtain a federally issued nine-digit Employer Identification Number (EIN), or a Taxpayer ID number, and substitute that for your Social Security number. Again, this in effect illegally creates a new identity, which can be used to get credit cards and loans.
Add to the above using internet phone lines for the transaction, and you’ll be guilty of racketeering as well.
Less fraudulent — but no less unethical — ways the credit cleaners try to achieve their goals include inundating credit bureaus with dozens of letters, disputing all negative information on your credit report. By law, if a credit bureau does not respond to requests within 30 days, they must remove the disputed items from your credit report. The theory is that the bureau will be so busy answering all the frivolous claims that they won’t be able to review them all and therefore default on the 30-day limit. In addition to its questionable morality, this tactic has been rendered ineffective by the credit cleaners’ frequent use of it. Credit bureaus are now allowed to refuse or ignore frivolous requests from credit repair services — they automatically red flag bulk requests that refute each and every entry (even the good ones) on the report. And the fact is that the bureaus are practiced at determining whether bad marks on your report are bona fide.

 

Legal and Ethical Tactics You Can Do Yourself For Free

Credit cleaners claim that they can persuade credit bureaus to remove negative information from your credit report for a fee. What they don’t tell you is that you can accomplish the same thing in the same way free of charge. How? Contact your creditor personally. The credit bureau cannot remove valid bad marks off your record unless told to do so by the creditor who put it there. Inaccurate negative info on your credit report can be removed easily with a simple phone call to the creditor. Be calm, respectful, and grateful, never aggressive or angry. Many times your creditor will work hard to help you. Even if you paid a bill late years ago, you may be able to convince them to remove the bad mark on your credit report, especially if there were mitigating circumstances.

 

New Law on the Books

As it happens, there is a new federal law, the Credit Repair Organizations Act (CROA), designed to help consumers combat fraudulent credit repair scams. Any credit cleaner that claims it can improve a consumer’s credit report and charges for the service in advance is in violation of CROA, plain and simple.
Don’t be taken in by the “quick and easy” pitches of credit repair companies. If it sounds too good to be true — it probably is.


Brochures about credit repair schemes are available on the FTC’s web site (www.ftc.gov) or by calling toll-free 1-877-382-4357.

 

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