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Credit Repair Scams


NOTICE: TO ALL CONCERNED Certain text files and messages contained on this site deal with activities and devices which would be in violation of various Federal, State, and local laws if actually carried out or constructed. The webmasters of this site do not advocate the breaking of any law. Our text files and message bases are for informational purposes only. We recommend that you contact your local law enforcement officials before undertaking any project based upon any information obtained from this or any other web site. We do not guarantee that any of the information contained on this system is correct, workable, or factual. We are not responsible for, nor do we assume any liability for, damages resulting from the use of any information on this site.

Facts for Consumers from the Federal Trade Commission

Credit Repair Scams -- August 1992

Produced in cooperation with the National Association of
Attorneys General

Credit Problems? No Problem!
Erase Bad Credit! 100% Guaranteed!
Remove Bankruptcy and Liens from Your Credit File!

If you are looking for a way out of your credit problems, do not
believe promises like these!

There is a brisk business among so-called "credit repair"
companies that charge from $50 to more than $1,000 to "fix" your
credit report. In many cases, these outfits take your money and
do little or nothing to improve your credit report. Often, they
just vanish.

There are no quick or easy cures for a poor credit history. If a
credit repair company promises you it can clean up your credit
report, remember the following:

l Your credit history is maintained by private companies
called credit bureaus that collect information reported to them
by banks, mortgage companies, department stores, and other
creditors.

l These credit bureaus can legally report accurate negative
credit information for seven years and bankruptcy information for
ten years.

l Accurate items that are within the seven (or ten) year
reporting period cannot be erased from your credit record by
companies advertising "credit repair" services.

l If you have a poor credit history _ even if your past
problems were due to illness or unemployment _ time is the only
thing that will heal your credit report.

l The only information in your credit report that can be
changed are items that are actually wrong or beyond the seven (or
ten) year reporting period.

l If there are genuine mistakes or outdated items in your
report, you can fix them yourself.

In fact, you can do anything a credit repair company can do _ for
free or for only a few dollars.

What's in Your Credit Report?

If you are having trouble getting credit, try checking your
credit report yourself. The credit report tells how you have
managed your credit in the past. Companies examine your credit
report before deciding whether to give you credit. When a
company denies your request for credit because of your credit
report, it must tell you so and identify the credit bureau that
supplied the report.

Credit bureaus are required by law to share with you any
information they have on file about you. You can find out what is
in your credit report by taking the following steps:

l Contact local credit bureaus. You can find them listed in
the telephone Yellow Pages under "Credit Bureaus" or "Credit
Reporting Agencies." Your local bank or retailer also may be
able to identify them.

l Ask for a copy of your credit report. There may be a fee of
$5 to $20, but if you have been denied credit within the past 30
days, your credit report is free.

l Most credit bureaus will mail you a copy of your report.
Under the law, you also have the right to visit their offices to
review your credit report in person.

How to Correct Mistakes in Your Credit Report

Review your credit report for any mistakes or information more
than seven years old (ten years for bankruptcy). This
information should be deleted. If you do not understand
something, ask. The credit bureau is required by law to explain
your report to you. If there are mistakes, you can take the
following actions:

l Notify the credit bureau of the problem and provide as much
information as you can about what is wrong with the report. The
bureau must, at no charge to you, reinvestigate the disputed
information. It then must correct any mistake or delete any
information it cannot verify. At your request, the bureau must
send a corrected copy of your report to anyone who received the
incorrect version within the past six months.

l Sometimes, it also is helpful to contact the creditor
directly to ensure that the creditor's records are correct.

l If these steps do not resolve matters, you can file a
written statement of up to 100 words with the credit bureau
explaining your side of the story. This explanation will be
included in your credit report.

Spotting Credit Repair Scams

If you are tempted to contact a credit repair company for help,
use considerable caution. The Federal Trade Commission (FTC) and
a number of state Attorneys General have sued credit repair
companies for falsely promising to remove bad information from
credit reports. Consider the following:

l Contact your state Attorney General, local Better Business
Bureau, and state or local consumer affairs agency to check out
the credit repair company. See if complaints have been lodged or
legal actions taken against the company.

l Be alert if you are told that accurate information will be
changed or erased or that only the credit repair company can
remove old or inaccurate information. Such claims are false.

l Be especially wary if you are asked for a large sum of money
in advance, before the credit repair company completes the job it
promises to do. Even a money-back guarantee will not protect you
if the company is dishonest.

Other Credit-Related Scams

Consumers searching for an easy way out of their credit problems
are susceptible to a wide range of credit-related scams in
addition to credit repair fraud. Some of these include:

Credit by Phone

Pay-per-call or "900-number" services have become a popular
vehicle for phony credit schemes. Television or print ads promise
that "guaranteed" credit or cash loans are only a phone call
away. Instead, the caller might receive a list of banks offering
low-interest credit cards or a booklet on how to establish
credit. Such calls can cost $50 or more, but consumers rarely end
up getting credit as a result.

Be aware that if you call "900" or "976" exchanges for
information, you will be charged for the call, even if you decide
you do not want what the company is promoting.

"Gold" or "Platinum" Cards

Beware of promotions for "gold" or "platinum" cards that promise
to get you credit and build your credit rating even if your
credit history is poor. Although they may sound like general
purpose credit cards, some of these "gold" or "platinum" cards
only permit you to buy merchandise from special catalogs and will
not help you obtain credit from other sources.

You also may find that ad for these cards direct you to call
"900" or "976" exchanges for more information. Remember that
charges for these calls add up quickly.

Checking Accounts Scams

Another scam involves your checking account number. It typically
begins with a postcard advertising easy credit approval or low
credit card interest rates. When consumers call, they are asked
for their checking account number, supposedly as part of a
"verification process." This number can be magnetically encoded
on a draft, which is forwarded to the consumer's bank. Sometimes
banks pay out hundreds of dollars from the consumer's account,
not realizing that the consumer never approved the withdrawal.
For your protection, never give out your checking account number
or credit card number unless you are certain that you are dealing
with a reputable company.

If You are Victimized

Many states have passed laws regulating credit repair companies.
This may help if you have lost money to credit repair scams. Even
if your state has no such law, you still may have legal rights
against the company. Plus, by reporting the incident, you can
help ensure that others are not victimized.

If you have had a problem with a credit repair company, do not be
embarrassed to report it or assume it is not worth your time.
Contact your local consumer protection agency or your Attorney
General's office in your state capital. Many Attorneys General
have toll-free consumer hotlines. Check with your local
directory assistance.

You also may write: Correspondence Branch, Federal Trade
Commission, Washington, D.C. 20580. While the FTC does not
handle individual cases, it can act when it sees a pattern of
possible law violations develop.

5/91; 9/91
 
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