Credit Repair Companies:
Having a good credit rating is important. Without it, you may be denied low interest loans and lines of credit, a job, a rental, and even an insurance policy. If your credit report shows a history of debt problems or contains errors, you may be considering using a repair service to “clean it up.” Before you pay, however, know the way these businesses operate. In the vast majority of cases, hiring an outside company will do no more than waste your money.
How credit repair businesses work
Sound good? Well, there are a couple of problems with this process. The first is that if the information the credit repair service is disputing is indeed correct, they will re-report it the next time they submit data to the bureaus. Also, deliberately disputing accurate notations is an illegal misuse of the process. Lastly, if an item genuinely should not be on the report, the Fair Credit Reporting Act guarantees you the right dispute the information with the bureaus easily and for free.
Another practice these types of businesses may use is file segregation. This is where the credit repair service has you apply for an Internal Revenue Service Employer Identification Number (EIN), which has the same number of digits as a Social Security number. Once you have the EIN, you are then instructed to apply for new credit with it, so you can build an entirely new credit history. This practice is not only against the law, it is rarely effective. By starting all over again you will have a blank credit history, which lenders often perceive as negative or suspicious.
Alternatives to credit repair services
Building and maintaining a good credit rating keeps your opportunities open. However tempting it may be to pay someone to undo damage, you are your own best resource. In short, no one can legally remove accurate and timely negative information from a credit report, and everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.
|Copyright © 2007 CCCS||Close Window|