Credit Score Repair Scams

Here's a question that Market Watch recently received about credit score repair scams:

My e-mail box runneth over with offers to erase negative items from my credit records. Is this possible? Legitimate?

Market Watch's answer:

Yes, it's possible, but it's usually not on the up-and-up.

These so-called "credit doctors" use -- or should I say abuse -- the system set up by Uncle Sam by which consumers can protest items in their credit histories that they believe are invalid. Under that system, when a credit bureau receives your inquiry, your credit provider is notified and the negative item is removed from your file for a period of 30 days to give the provider a chance to respond. But when the creditor answers back and says the item is correct, it goes right back on your records.

What phony credit-repair companies do is charge people a lot of money to write letters they could write themselves. And then, a month later, the offending marks in your file come back to haunt you.

Another favorite ploy of these scam artists is to obtain a new Social Security number on your behalf, which is patently illegal. Don't apply for an Employer Identification Number to use instead of a Social Security number, either. That's illegal as well. If you try to create a new credit identity, you could be subject to prosecution.

The bottom line:

There isn't anything a credit-repair firm can do for you for a fee that you can't do for yourself for free. So avoid any company that wants you to pay for such services, especially before they provide them. That too is against the law.

I've never had to deal with a credit repair company, so I'm at a disadvantage when it comes to offering practical advice on this issue, but I do have a few thoughts:

1. I make it a policy to NEVER make a financial transaction with someone I don't know and just received an email from. Does this seem like a good idea to anyone? Can anyone spell P-H-I-S-H?

2. There are legitimate ways to fix bad credit and you should beware of credit score quick fixes.

3. Having a good credit score can save you thousands of dollars, so you should do all you can to boost your credit score. Me? I simply have no debt and pay all my bills on time. Seems to work out fine.

4. If you need help getting out of debt, here are some Free Money Finance posts that you might be interested in:

• Nine Ways to Pay Off Debt

• Strategies for Dealing with Credit Card Debt

• Get Out of Debt

• 8 Ways to Consolidate Debt

Comments

[Andrew]

Pay your bills on time and don't accrue any debt? If the majority of Americans did that this country would be the most financialy saavy place around. It is unfortunate people fall into heaps of debt and then have to navigate the Credit Repair waters. If only more people read your blog or the many others and followed the good advice.

[Remove Bankruptcies]

Be very thorough in documenting all mistakes you find in your credit reports. Identify which points of the reports are wrong and tell them why. A good stategy is to give the credit bureaus photocopies of their reports and encircling the mistakes. Don’ t forget to supply the correct entries to the mistakes. Keep all documents and forms you send to the credit bureaus and keep note of the dates. The credit bureaus must look into and investigate all credit disputes within 30 days. If a dispute is not verified by...