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Free Credit Repair Tips
You see the
advertisements in newspapers, on TV, and on the Internet.
You hear them on the radio. You get fliers in the mail.
You may even get calls from telemarketers offering credit
repair services. They all make the same claims:
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"Credit
problems? No problem!"
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"We can erase
your bad credit-100% guaranteed."
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"Create a new
credit identity-legally."
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"We can remove
bankruptcies, judgments, liens, and bad loans from
your credit file forever!"
Do yourself a favor and
save some money, too. Don't believe these statements. Only
time, a conscious effort, and a personal debt repayment
plan will improve your credit report.
This brochure explains how you can improve your credit
worthiness and lists legitimate resources for low or
no-cost help.
The Scam
Everyday, companies nationwide appeal to consumers with
poor credit histories. They promise, for a fee, to clean
up your credit report so you can get a car loan, a home
mortgage, insurance, or even a job. The truth is, they
can't deliver. After you pay them hundreds or thousands of
dollars in up-front fees, these companies do nothing to
improve your credit report; many simply vanish with your
money.
The Warning Signs
If you decide to respond to a credit repair offer, beware
of companies that:
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Want you to pay for
credit repair services before any services are
provided;
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Do not tell you
your legal rights and what you can do-yourself-for
free;
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Recommend that you
not contact a credit bureau directly;
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Suggest that you
try to invent a "new" credit report by
applying for an Employer Identification Number to use
instead of your Social Security Number; or
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Advise you to
dispute all information in your credit report or take
any action that seems illegal, such as creating a new
credit identity. If you follow illegal advice and
commit fraud, you may be subject to prosecution.
You could be charged
and prosecuted for mail or wire fraud if you use the mail
or telephone to apply for credit and provide false
information. It's a federal crime to make false statements
on a loan or credit application, to misrepresent your
Social Security Number, and to obtain an Employer
Identification Number from the Internal Revenue Service
under false pretenses.
Under the Credit Repair Organizations Act, credit repair
companies cannot require you to pay until they have
completed the promised services.
The Truth
No one can legally remove accurate and timely negative
information from a credit report. But the law does allow
you to request a reinvestigation of information in your
file that you dispute as inaccurate or incomplete. There
is no charge for this. Everything a credit repair clinic
can do for you legally, you can do for yourself at little
or no cost. According to the Fair Credit Reporting Act:
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You are entitled to
a free copy of your credit report if you've been
denied credit, insurance or employment within the last
60 days. If your application for credit, insurance, or
employment is denied because of information supplied
by a credit bureau, the company you applied to must
provide you with that credit bureau's name, address,
and telephone number.
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You can dispute
mistakes or outdated items for free. Ask the credit
reporting agency for a dispute form or submit your
dispute in writing, along with any supporting
documentation. Do not send them original documents.
Clearly identify each
item in your report that you dispute, explain why you
dispute the information, and request a reinvestigation. If
the new investigation reveals an error, you may ask that a
corrected version of the report be sent to anyone who
received your report within the past six months. Job
applicants can have corrected reports sent to anyone who
received a report for employment purposes during the past
two years.
When the reinvestigation is complete, the credit bureau
must give you the written results and a free copy of your
report if the dispute results in a change. If an item is
changed or removed, the credit bureau cannot put the
disputed information back in your file unless the
information provider verifies its accuracy and
completeness, and the credit bureau gives you a written
notice that includes the name, address, and phone number
of the provider.
You also should tell the creditor or other information
provider in writing that you dispute an item. Many
providers specify an address for disputes. If the provider
then reports the item to any credit bureau, it must
include a notice of your dispute. In addition, if you are
correct-that is, if the information is inaccurate-the
information provider may not use it again.
If the reinvestigation
does not resolve your dispute, have the credit bureau
include your version of the dispute in your file and in
future reports. Remember, there is no charge for a
reinvestigation.
Reporting Negative
Information
Accurate negative information generally can be
reported for seven years, but there are exceptions:
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Bankruptcy
information can be reported for 10 years;
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Information
reported because of an application for a job with a
salary of more than $75,000 has no time limitation;
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Information
reported because of an application for more than
$150,000 worth of credit or life insurance has no time
limitation;
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Information
concerning a lawsuit or a judgment against you can be
reported for seven years or until the statute of
limitations runs out, whichever is longer; and
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Default information
concerning U.S. Government insured or guaranteed
student loans can be reported for seven years after
certain guarantor actions.
The Credit Repair Organizations
Act
By law, credit repair organizations must give you a copy
of the "Consumer Credit File Rights Under State and
Federal Law" before you sign a contract. They also
must give you a written contract that spells out your
rights and obligations. Read these documents before
signing the contract. The law contains specific
protections for you. For example, a credit repair company
cannot:
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make false claims about their
services;
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charge you until they have
completed the promised services; or
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perform any services until they
have your signature on a written contract and have
completed a three-day waiting period. During this
time, you can cancel the contract without paying any
fees.
Your contract must specify:
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the payment terms for services,
including their total cost;
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a detailed description of the
services to be performed;
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how long it will take to achieve
the results;
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any guarantees they offer; and
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the company's name and business
address.
Have You Been Victimized?
Many states have laws strictly regulating credit repair
companies. States may be helpful if you've lost money to
credit repair scams.
If you've had a problem with a credit repair company,
don't be embarrassed to report them. While you may fear
that contacting the government will only make your
problems worse, that's not true. Laws are in place to
protect you. Contact your local consumer affairs office or
your state attorney general (AG). Many AGs have toll-free
consumer hotlines. Check with your local directory
assistance.
Need Help? Don't Despair
Just because you have a poor credit report doesn't
mean you won't be able to get credit. Creditors set their
own credit-granting standards and not all of them look at
your credit history the same way. Some may look only at
more recent years to evaluate you for credit, and they may
grant credit if your bill-paying history has improved. It
may be worthwhile to contact creditors informally to
discuss their credit standards.
If you can't resolve your credit problems yourself or you
need additional help, you may want to contact a credit
counseling service. There are non-profit organizations in
every state that counsel consumers in debt. Counselors try
to arrange repayment plans that are acceptable to you and
your creditors. They also can help you set up a realistic
budget. These counseling services are offered at little or
no cost to consumers. You can find the office nearest you
by checking the white pages of your telephone directory.
In addition, nonprofit counseling programs sometimes are
operated by universities, military bases, credit unions,
and housing authorities. They're also likely to charge
little or nothing for their services. Or, you can check
with your local bank or consumer protection office to see
if it has a list of reputable, low-cost financial
counseling services.
Do-It-Yourself Check-Up
Even if you don't have a poor credit history, it's a good
idea to conduct your own credit check-up, especially if
you're planning a major purchase, such as a home or car.
Checking in advance on the accuracy of the information in
your credit report could speed the credit-granting
process.
You're entitled to one free report a year if you can prove
that (1) you're unemployed and plan to look for a job with
60 days, (2) you're on welfare, or (3) your report is
inaccurate because of fraud. Otherwise, a credit bureau
may charge you up to $9.00 for a copy of your report.
Credit bureaus usually are listed in the yellow pages of
your telephone book under "credit reporting
agencies." Three large national credit bureaus supply
most credit reports: Equifax, Experian and Trans Union.
You may want to contact each of them for a copy of your
report.
Equifax
1-800-685-1111
www.equifax.com
Experian
1-888-EXPERIAN (397-3742)
www.experian.com
Trans Union
1-800-916-8800
www.transunion.com
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