Are Credit Repair Companies helpful?
You may have seen ads promising to get you a brand new credit file. Or you may have seen warnings from the consumer protection agency about credit repair scams. The truth may be obscured between the two. There are lots of complaints to the Federal Trade Commission and other consumer protection agencies about credit repair companies, and in fact there have been numerous cases filed, and web sites put on notice for violating state and federal laws. credit improvement
It's not difficult to understand why people may fall victim to scams from repair companies as they may have ruined credit and are desperate to borrow again or the need to begin building wealth after some financial mistakes. Borrowing at low rates for good debt can be worthwhile, but phony schemes should be avoided.
A brand new Credit Rating: It can be extremely difficult to start a credit history, even with a new Social Security or Employer Identification number. There a variations of these scams that may involve stolen identities of deceased people and false EINs.
Credit is guaranteed to everyone: If you are having trouble getting credit, you may be attracted to offers that promise a major credit card or line of credit. In many of theses cases, you may be required to pay an unlawful fee that can be as much as $1500.
Unsecured Credit Lines may also be offered, but the unknown proviso, is that you are only allowed to use it purchase from particular stores, and you may also be required to make hefty down payments on ordered merchandise. Another variation includes fees that exceed the amount of allowed credit.
Should you use Credit repair companies?
While there are scams among the repair companies, there are times when credit repair agencies can be helpful. If you are having little success in attempts to repair your credit, you may need assistance in specific problems. There are law firms that specialize in credit repair, but they should be chosen carefully.
Credit repair companies are regulated at the Federal and state levels the obligations include advising you of your rights as a consumer, before you sign any contract.
Under consumer credit laws, it is illegal for credit repair companies to make false claims about their services, or perform any services, until you have signed a contract and a three day waiting period, during which you can cancel the contract without paying fees, has been completed. They are also not allowed to charge until all promised services have been completed.
Paying credit repair companies:
Many credit agencies get around the up-front fee clause by denoting the fee as educational services before the repair is performed, and some may refund fees, if items cannot be remove from your credit file. Before deciding to use the services of any credit repair companies, it is very important to do your due diligence and decide what can be done on your own.
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