What if there was a magic way to trick the three major credit score companies, Equifax, Experian and TransUnion, into improving your credit score? Wouldn’t it be great if all you had to do was pay a credit fix-it company a little money and whammo! the next day you had a 800+ credit score. All the missed payments, all the credit limit overages, years of spending beyond your means, all gone.
An entire industry has been built on quick fix schemes for those who have a few dings (or more) in their credit. These credit repair companies tout their ability to improve your score through legal maneuvers. They claim that they can remove bankruptcy, charge offs, and other negative information from their client’s credit report. They provide impressive statistics citing thousands of satisfied clients.
101MoneyTalk.com has the inside scoop on these credit repair company tactics. Aside from a few that you can do yourself, the rest are smoke, mirrors and “marketing.” We start with the credit repair scams, because this is the stuff that you REALLY need to know. Then we’ll move to the legitimate actions that they take that you can take also – for free.
Credit Repair Scams
Credit Repair Scam Number 1 – The credit repair companies suggest that they are “in close” with the credit reporting agencies and therefore can have items removed due to their special relationships.
Credit Repair Scam Number 2 – The credit repair companies suggest that they can help you start over with a new “clean file.” They suggest that by applying for a new taxpayer identification number, or something similar, you can become a new person with the same name. THINK PRISON TIME HERE PEOPLE. The Federal Government does not take kindly to someone changing their tax payer information in order to trick anyone for anything.
Credit Repair Scam Number 3 – The credit repair companies deluge the credit reporting bureaus with unsubstantiated challenges. This has a temporary effect, since the line items in question are placed on hold if not verified within thirty days. Given the quantum of challenges, the overworked credit reporting bureau places many items on hold, but they eventually get sorted out and are reinserted back on the client’s credit report. The worse part is that the “credit repair” company has taken their fee and disappeared at this point.
Credit Repair Scam Number 4 – Call the 900 number and get a full credit repair “kit.” Sure, you’ll get a small packet of information for a $29.95 charge on your telephone bill – I don’t recommend it. It’s costly and the information is most likely available on an internet search for free (maybe even here right now). The most insidious part to this is that they may be setting the person up for the “big charge” coming when the salesperson at the credit repair company calls he often talks the unsuspecting target out of thousands of dollars for “personal repair” service.
What Can Credit Repair Companies Do to Legitimately “Fix” Your Credit
There are only a few things credit repair companies can legally do to improve your credit score, each of which you can do yourself.
1. Contest information that is incorrectly posted to your credit report.
People with similar names are occasionally confused with one another by the credit bureaus – if this happens to you, a well placed letter to the three credit bureaus should clear up any misunderstanding.
2. Ensure that correct information is only posted for the “required” amount of time. In the case of charge-offs, late payments, etc – this is seven years. In the case of bankruptcy, 10-years – In the words of “Baretta” from the television show of the same name, “Don’t do the crime if you can’t do the time,” but the rule does not mean that you have to do more time than necessary. Seven or ten years, that’s it. Don’t allow one day more. If you pull your report and the item is still there after this time, the agencies are very good about removing it quickly. Sometimes malicious collection agencies will continue to report you past the day – the credit bureaus will fix this, just write to them, click here for their addresses.
Legitimately fixing your credit is not difficult and should not be expensive, but remember you can’t cheat – work on the longer term solutions outlined in our Special Report: Improving Your Credit Score, and correct mis-reported and stale information in the short run