If you're one of the unfortunate people with bad credit, you've probably seen ads in newspapers, on TV, radio, and on the Internet that say they can fix your credit by getting rid of bankruptcies, giving you a new identity, and getting rid of all bad credit records.
But the truth is that these credit repair companies make too many promises they can't keep. They just trick their clients out of their money and make it disappear. The only reliable way to fix bad credit is to put in your own time and effort and come up with a plan that you will stick to.
There are some red flags you can look for to see if a credit repair company is following the law. First of all, they can't charge you anything before they do anything for you. You should be worried if the credit repair company tries to stop you from calling the credit bureau directly or avoids answering any questions you may have about your legal rights as a debtor.
There are some credit repair companies with bad reputations that will tell you to start disputing all of the information in your credit report. Some people will tell you to do something that is against the law, like get a new EIN instead of a Social Security number to make a new identity. Since you are doing things that are against the law and dishonest, you could be charged. Federal law says that it is a crime to give false information when you apply for credit, lie about your Social Security Number, or give the IRS false information to get a new Employer Identification Number.
Your credit report keeps track of negative information for seven years, but it keeps track of your bankruptcy for ten years. People who don't pay back loans backed by the US government or student loans are reported for seven years.
No one can remove accurate information from your credit report, but you can ask for a reassessment or reinvestigation of any credit that you think is wrong or not complete in some way. The Fair Credit Reporting Act lets you dispute any errors or old items on your credit report for free. All you have to do is ask the credit reporting agency for a form to file a dispute or send them a letter with your concerns. Be clear about the thing or things you want to dispute, explain why you want to dispute them, and ask for a new investigation. Keep a copy of your points of dispute with you at all times. If the investigation finds a mistake, you can ask for the corrected form to be sent to everyone who got your credit report in the last six months. If the second investigation doesn't solve your problem, you can also ask the credit bureau to include your dispute report in all of their future reports.
Every state has its own laws that control how credit repair companies can do their jobs. If a fake credit repair company takes you for a ride, tell your local consumer affairs office or the office of your state's attorney general right away.
