Credit repair companies often claim they can give you a new, positive credit history no matter your financial situation. Before you sign up for credit repair service, weigh their claims against advice from government, financial, consumer and credit reporting agencies.
Equifax
Equifax is one of the nation's leading credit reporting agencies. The agency collects information about you from creditors, including the amount you owe and your repayment history. From here, it assigns you a credit score to help creditors evaluate you as a borrower. According to Equifax, you should research any credit repair company before signing up to protect yourself from scams, which the agency says have become common enough to provoke federal legislation. Find out what grade the Better Business Bureau assigns the credit repair company and contact the attorney general where the company is located to ensure it has a valid business license. Obtain written verification of the amount the company will charge you and avoid any company that wants payment before providing help. Also ask how the company protects your sensitive information, such as banking information.
Federal Trade Commission
It's illegal for credit repair companies that provide services online or by phone to charge you before helping you, according the the Federal Trade Commission. The FTC also warns consumers to avoid companies that claim the ability to improve your credit report regardless of your situation, as these are usually credit repair scams. Such companies may use illegal methods to revise your credit report, such as encouraging you to use an Employer Identification Number instead of your Social Security Number to disguise your financial history. A legitimate company should offer at least some free information that helps you improve your own credit since there is no quick fix, according to the FTC.
Mint.com
Mint.com is a popular provider of free online budgeting software. According to Mint's credit expert John Ulzheimer, you should only do business with credit repair companies that operate in accordance with the federal Credit Repair Organizations Act and similar state laws. This means that the company must not make deceptive claims, must inform you that you can contact credit reporting agencies directly and must not charge you before providing services. While Ulzheimer acknowledges that credit repair companies have a reputation of scamming consumers, he notes that such companies account for fewer than 2 percent of the complaints the FTC receives.
Credit Repair Reviews
CreditRepairReviews.net reviews credit repair companies to help you decide which are least likely to be scams. The company says that many credit repair companies use illegal methods and are ineffective at repairing your credit. It weighs credit repair companies' length of operation history, BBB grade and marketing tactics, then recommends five companies. It lists the costs of each company's services and additional information to help you make your decision.
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