Credit Repair - Warnings!

There are companies that prey on people with damaged credit ratings, so you need to be careful as you repair and rebuild your credit on which methods you use.

If you are looking into other resources, be careful to avoid the following scams: Guaranteed Credit Cards: If you see offers for “guaranteed credit cards regardless of your credit,” beware.

There are two variations on this scam:

1. In one, the issuer makes it sound like you’ll get a major (unsecured) credit card but instead you get a card that only allows you to purchase merchandise from that company’s catalog.

2. In the second, you may get a $300 credit line, but the company will charge about $275 in various fees. You’ll start out with a big balance when you haven’t purchased anything! Unlike a secured card where you put down a deposit of money you can use as your credit line, the $275 in fees will never be refunded to you. Advance Fee Loan Scams: Some lenders will advertise that they can guarantee you’ll get a loan for an upfront fee that can range from as little as $19 to several hundred dollars. Don’t be duped. Don’t pay a fee upfront to get a loan before you’ve been approved. This is fraud according to the Federal Trade Commission, and it’s against the law.

Fraudulent Credit Repair Services: Credit repair services are not a scam. There are legitimate companies that will do the work for you in finding mistakes and making disputes on your behalf. HOWEVER, some companies use illegal techniques that can land you in jail! For example, some companies will tell you to get an Employer Identification Number (EIN) which is the same number of digits as a Social Security Number, but lawfully used for a business. Then the company will tell you to apply for a new line of credit using that number. The goal is to establish a brand new credit file. Obtaining an EIN for that reason is illegal and you can be prosecuted! In other credit repair scams, companies will sell the identities of people who have died, and encourage consumers to use that information to get new credit. This is a form of identity theft and it’s a federal crime.According to the Federal Trade Commission, you should beware of credit repair companies who: Require you to pay for credit repair services before any services are provided.

Do not tell you your legal rights and what you can do yourself for free. Recommend that you not contact a credit bureau directly. Suggest that you try to invent a “new” credit report by applying for an Employer Identification Number to use instead of your Social Security Number. Advise you to dispute absolutely everything in your credit report. Take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution. You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services.

If you feel like you need to use a credit repair service to handle the work for you and/or feel it may increase your chances to successfully dispute errors, please visit Attorney Omar Zambrano.

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