During the recent financial crisis, many people found it difficult to pay all of their bills on time, usually due to a job loss or a reduction in their working hours. As a result, their credit score took a significant hit, increasing their cost for many financial products like insurance and car loans. Desperate to raise their credit score back to its previous heights, these consumers often turn to companies that claim to help them increase their credit score in a short amount of time. Unfortunately, there are a number of unscrupulous companies out there that prey on these consumer’s desperation by offering credit repair services that are a scam at best or criminal on the part of the consumer at worst. Here are some ways to identify whether a credit repair service is a scam.
Offering To Create A New Credit File
One prevalent type of credit repair scam has the scammers offering to create a new credit file for the consumer, divorced of their previous credit problems. While offered as a chance for the consumer to make a new start and rebuild their credit, it often leads to criminal charges against the consumer that paid for the service. That is because the new credit file is often associated with an employee identification number obtained from the IRS that is used in place of the individual’s social security number. In essence, the consumer is creating a new, fraudulent identity, which is against the law across the country. Thousands of people become victims of this type of credit repair scam every year.
Offering To Remove Negative Information In Your Credit History
In most cases, a company that tells a consumer that they can remove negative information from their credit history to increase their credit score is lying. Factual negative information on a credit report cannot be removed by a call from a random company. The only thing that can remove factual information from your credit report is the passage of time, typically in 7 or 10 years depending on the type of negative information reported. At most, these companies can challenge the negative information with the credit bureaus and force your creditors to provide documentation of the default, but if that documentation is provided, the negative information will remain.
Challenging negative information on a credit report is something that you can do yourself without paying a company to do it for you. Obtain free copies of your credit reports from www.annualcreditreport.com and review the information on them to ensure that everything is correct. If you notice anything on them that is wrong, notify the credit monitoring company that issued the credit report with the error in writing to inform them of the incorrect information. They will open an inquiry and if you are found to be correct, the negative information will be removed from your credit report.