Four Tips for Avoiding Credit Repair Scams

With the number of foreclosures occurring these days, there are many people trying to take advantage of the vulnerable nature that people have once they are displaced from their homes. They scramble to improve their credit so they can apply for another mortgage or just get approved to rent a home. Unfortunately, when this happens, many people rush into programs that turn out to be scams designed to take advantage of their vulnerability. If you are considering a credit repair program so you can take advantage of the current mortgage rates, here are some times to help you avoid being scammed.

Removing Accurate Information
One of the more common credit repair scams involves a company saying they can clean up your credit by having negative information removed. What the company actually does is dispute accurate information on your credit report, such as a delinquent debt, on your behalf. The item is removed from your credit report for a short time while the credit reporting agency verifies the claim, at which time it goes right back on your report. If the information is accurate, it will always get back on your report even if it is removed for a short time. Never use a service that promises to clean up your credit report because you can have inaccurate information removed yourself.

Creating a New Identity
some credit repair companies will suggest that you set up a new identity through an Employer Identification Number. This creates a new credit report which you can use when applying for a new mortgage or some other type of loan. However, this is illegal and you could get in serious trouble for doing misrepresenting your identity. In fact, it’s a federal crime and you could pay huge fines or even end up in jail. That’s not the kind of housing solution that you want!

Paying in Advance
One good tipoff to a credit repair service being a scam is that they ask you to pay in advance. Credit repair companies cannot ask for payment for services until those services have been completed. If the company wants you to pay upfront, go to another company that is more reputable.

Incomplete or Lack of Contract
Written contracts are important before entering into any type of agreement. When considering a credit repair company, are they giving you time to review the contract before making your decision? If they try to pressure you, it could be a sign that they don’t want you to carefully consider the contract. Also, make sure the terms are spelled out in the contract before signing it. Make sure there is a date by which the services will be performed, a cost for the services, the company’s contact information and a clause that allows you to cancel the contract within three days. All of these are signs of a legitimate contract and if any of these things are missing, move on to another company.