Credit Repair Red Flags

You’ve heard the radio ads, seen the TV commercials, even the cheap handwritten signs posted on telephone poles.

They all promise to help repair your credit and get you approved for that car, that loan, that line of credit… whatever it is that you probably don’t need.

I get a lot of emails from people asking me if a certain company or website is legitimate.  I could do background checks on every business all day, but it’s far easier than that.  The Federal Trade Commission has posted a good alert and things that should raise a red flag when you’re deciding on whether to sign up with one of these companies.

AARP recently posted some good tips…  

Here’s what to do if you’re in a credit crunch:

Know the realities. Anyone who promises to remove accurate debt information from your credit history is lying. Under federal law, debt remains in a credit report for about seven years; bankruptcies stay listed for 10 years. And it’s illegal in many states to accept an advance payment for any debt-adjusting service.

Monitor your file. You are entitled to three free credit reports each year at Annualcreditreport.com. (FICO credit scores start at $10 at Equifax and TransUnion; Experian no longer provides them.) Check for any fraudulent debts resulting from identity theft, which can be legally removed at no charge by contacting those three agencies yourself.

Get legitimate help. Bona fide credit counseling services usually arrange a structured repayment or consolidation plan for free or for a small fee. The National Foundation for Credit Counseling (1-800-388-2227) operates the largest and most respected network.

The bottom line is this: Why would you pay a company to do something that you can do yourself? Many companies require you to sign over power of attorney so that they can speak to your creditors on your behalf.  This limits your ability to speak with your creditors and find out exactly what is going on with your credit.

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