Your credit history helps potential creditors determine how likely you are to pay back your debts based on how you have handled credit in the past. If your credit is poor, you may want to repair it so that you can get additional credit or more easily get an apartment. Credit repair services often offer to help you repair your credit quickly; however, the Federal Trade Commission says that most of these services are scams, and some can even land you in legal trouble. Legitimate credit repair services must follow FTC rules.
No Upfront Payment
Credit repair services may not ask you for money prior to providing service for you. Any service that requires a fee before your initial consultation is a scam. Never pay for credit repair services until you have consulted with the service provider and are satisfied with the service you receive. If a scammer tries to bilk you out of money by asking for credit repair fees prior to providing credit repair services, report him to the Federal Trade Commission.
Consumer's Bill of Rights
Credit repair services must give you a list of your rights regarding credit repair, including information about what you can do for free. For example, a legitimate credit repair service must tell you that you have a right to obtain a free credit report once a year from each of the three major credit bureaus and that you are entitled to an additional free report if you are turned down for credit.
Removal of Information Rules
No credit repair service can remove negative information from your credit history if the information is timely or correct. For example, if you filed for Chapter 7 bankruptcy in the past seven years, you cannot remove that from your credit history. Thus, credit repair bureaus are not allowed to claim they can remove all negative information from your history regardless of its accuracy or how long ago the negative information was reported.
Warning
The Federal Trade Commission says that if you commit illegal activity while attempting to repair your credit, you can face federal charges even if you committed the activity on the suggestion of a credit repair service. Thus, steer clear of services that advise you to dispute every negative item on your credit history regardless of its accuracy or offer to get you a new Social Security number or other identification for the purpose of falsifying your credit history.
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