Credit Repair Companies – Warning Signs

The first issue you need to watch for when you want legal and effective credit repair services is the affiliations of the business you chose for this purpose. Every reputable company will be eager to give you their references on request. Here are some pointers to keep in mind in order to steer clear of fraudulent credit repair companies.

1. The company should belong to the Ethical Credit Repair Alliance (ECRA) or a similar organization. You will often hear it advised to hire companies who are members of the BBB (Better Business Bureau) However, in the case of. those companies that are members of the ECRA are some of the best.

This body has its own stringent codes of conduct and any business that gets their approval will represent your best interest. All credit repair companies that find approval under the ECRA must maintain high standards of ethics in their business practices. This helps to protect you, the consumer from any kind of dishonest practices.

2. Know what credit repair is before seeking help. The majority of those who get “taken” by dishonest companies when seeking assistance to improve their credit, do not understand just what credit repair is. You should be knowledgeable about what credit repair services can do for you and what they cannot do.

Only when you are well aware of the difference, can you identify which organizations are reputable. For instance, derogatory accounts on your credit report cannot be removed if the credit bureaus verify their accuracy. There are those credit repair companies telling you that they can give you a clean credit report within a month or less. Now take a close look; can this be done without breaking the law? If you answer “No” you had best pass on their services.

3. Never accept unsolicited offers by e-mail. At a time when you find yourself in financial desperation, don’t think for a moment that it’s good fortune that sent you such an e-mail. Such e-mails are sent out by unscrupulous agencies who obtain your email address through various unethical methods, and send out e-mails by the millions in the hope that they will “catch” an unsuspecting “client” whom they can milk dry!

Beware of such emails. These are usually always these are scammers looking to profit from people’s desperation. Reputable credit repair companies will contact you through various media only in the case that you have requested information.

4. Creating a “new identity” cannot be done legally. This is a big mistake too easily accepted by a lot of people, mainly because it would seem to solve all their problems. This idea is so widely accepted due to a general ignorance regarding credit repair. But the problem is that this technique – called “File segregation” – is illegal!

Your credit score is a reflection of your payment history from the onset of adulthood until the present. Thus, it’s just not possible to get a “new” credit history. And since it’s not possible, any attempt to do so would have to be illegal. Thus there’s no question that the credit repair companies that offer this “solution” as a way out of your troubles are scammer.

5. Asking for full payment upfront should raise a red flag. According to Federal Law you need to have a detailed written contract from the agency beforehand and that payment be made only after services have been performed. You also have three days time to cancel the contract if you find it unsuitable.

A credit repair business can ask for an upfront charge for initial services, such as a credit report analysis, and thereafter charge monthly fees as they follow up every month with the credit bureaus to improve your credit. However, if you are required to pay the complete charge before any services have been rendered, it may be because they are aware you will refuse to pay once you realize that their claims have been overstated. Such companies are fraudulent and you must not deal with them!

6. Repairing credit is a lengthy process. As stated previously, no honest agency is able to fix credit in a short time or remove verifiable derogatory accounts from your credit report.

In a best case scenario, less serious issues can be fixed within two or three months, by removal of mistakes, and through timely payments on your loans. More serious issues such as foreclosures and repossessions will remain on your report for seven years, even with the best financial management. Bankruptcies cannot be removed for ten years. If you are given guarantees of a fast removal, you can be sure of fraud.

7. No contract? Forget it! If you’re not offered a contract, tell them to take a hike; by law you have the right to insist on a written contract. Fraudulent companies will shy away from offering you such a contract, and if they do there will be information missing regarding what services will be provided, what the fees are, and the like. You will better understand these organizations by the contract they offer you. And if for any reason no contract is offered.

8. If any guarantees are made, look out! Even the top quality companies can guarantee the results of their credit services. They may reasonably promise that all legal procedures will be used to improve your credit. But to guarantee results is dishonest and unrealistic.

Unfortunately, due to the nature of human beings, people would rather hire a company that tells them what the want to hear, rather than hire a credit repair business who gives them an honest and truthful assessment of the situation. Avoid falling prey to this trap! Even though promises of results are more appealing, credit repair companies that offer guaranteed results are fraudulent.

9. See if there are counseling services. A lot of credit repair companies will give you free counseling services.

If the agency you are looking at does not, try looking a little deeper. It might not be a trustworthy agency. All agencies of repute encourage and educate people on how to repair credit. The role of the company is to perform the services that are for those matters that need continued and persistent follow-up to effect the best results.

10. Bad advice? Beware! Some agencies have you dispute all negative trade lines on your credit report by stating “this is not my account..” Although the short-term results may be impressive, the creditors whose loans have been disputed may later counter it, and it will later be verified by the credit bureaus.

Given the fact that the record-keeping habits of the credit bureaus is appallingly poor, it’s extremely likely that any trade lines on your credit report has mistakes regarding the details. But credit repair companies that tell you to state “this account is not mine” if it in fact is yours, are not to be trusted.

As you can see, there are enough red flags along the way to alert you to possible fraud. Before anything else, before you hire credit repair companies it is to become knowledgeable regarding credit repair matters. You also need to know the minimum applicable laws prior to seeking help with your credit. For starters visit the FTC Bureau of Consumer Protection website and the Ethical Credit Repair Alliance.