The Top 3 Credit Repair Schemes to Avoid |

Credit repair companies can be sneaky. They’ll promise to fix any problems on your credit report, leaving you with a squeaky clean credit history even if you’ve actually made some financial mistakes. But these promises, which sound too good to be true, usually are. In fact, a single plan that can repair any and all credit problems immediately simply does not exist. Here are some common ways that companies who claim to fix credit problems will claim to help, and how to avoid them.

1. Don’t Pay Before You See Results

If a credit repair company asks you for any money before they do anything, be wary. The more reputable of these types of companies will only ask for payment if they are successful in fixing your credit. Some of the most unscrupulous of these firms ask for a down payment or even full payment up front, then disappear with the money. To avoid this, make sure you know the terms of any contract you sign before you sign it, and don’t give these firms access to any of your bank accounts. In addition, check references on any credit firm you use, to make sure they have actually done what they say they have done.

2. Do Not Apply for an Employer Identification Number

Sometimes, a company claiming authority on credit repairs will tell you to apply for an Employer Identification Number (EIN) with the government. The company will tell you to use this in place of your own Social Security Number so that you can start over when it comes to your credit history. However, this practice breaks at least three federal laws about misrepresenting yourself, so this so-called solution can cause you more harm than good. If a company promises to fix credit problems like this, run away as fast as you can. While it might seem like a relief to start fresh, this tactic will only create more long-term problems for you.

3. Avoid Bombarding the Credit Agencies

Some credit repair companies will try to fix your credit problems by bombarding the credit agencies with paperwork disputing every claim on your credit report. They claim that the credit reporting agencies will have to remove every item that is not verified within 30 days. While this is actually a law, the companies can put items back on your credit report once they are verified. So credit repairs made in this fashion might make things better for a while, but if the financial mistakes are truly yours, they will reappear before very long. Avoid any company that claims to repair credit in this manner.

Posted by: jenngerl     Tags: