Facts for Consumers*
Credit Repair: Self-Help May
- Accurate and timely information
cannot be removed from your credit report.
- Credit repair clinics can't
do anything to improve your credit report that you can't do for yourself,
at little or no cost.
- Avoid companies that want
you to pay for credit repair services before they provide
- It's illegal for telemarketers
who offer credit repair services to request payment until six months after
they've delivered the services.
You see the advertisements
in newspapers, on TV, and on the Internet. You hear them on the radio.
You get fliers in the mail. You may even get calls from telemarketers
offering credit repair services. They all make the same claims:
"Credit problems? No Problem!"
"We can erase your bad
credit -- 100% guaranteed."
"Create a new credit identity
"We can remove bankruptcies,
judgments, liens, and bad loans from your credit file forever!"
Do yourself a favor and save
some money, too. Don't believe these statements. Only time, a conscious
effort, and a personal debt repayment plan will improve your credit report.
This document explains how
you can improve your credit worthiness and lists legitimate resources
for low or no-cost help.
Everyday, companies nationwide
appeal to consumers with poor credit histories. They promise, for a fee,
to clean up your credit report so you can get a car loan, a home mortgage,
insurance, or even a job. The truth is, they can't deliver. After you
pay them hundreds or thousands of dollars in up-front fees, these companies
do nothing to improve your credit report; many simply vanish with your
The Warning Signs
If you decide to respond to
a credit repair offer, beware of companies that:
- Want 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; or
- Advise you to dispute all
information in your credit or 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.
Thanks to the new Telemarketing
Sales Rule, it's also a crime for telemarketers who offer credit repair
services to require you to pay until six months after they've delivered
No one can legally remove accurate
and timely negative information from a credit report. But the law does
allow you to request a reinvestigation of information in your file that
you dispute as inaccurate or incomplete. There is no charge for this.
Everything a credit repair clinic can do for you legally, you can do for
yourself at little or no cost. According to the Fair Credit Reporting
- You are entitled to a free
copy of your credit report if you've been denied credit within the last
30 days. If your application for credit, insurance, or employment is denied
because of information supplied by a credit bureau, the company you applied
to must provide you with that credit bureau's name and address.
- You can dispute mistakes
or outdated items for free. Ask the credit reporting agency for a dispute
form or submit your dispute in writing, along with any supporting documentation.
Clearly identify each item
in your report that you dispute, explain why you dispute the information,
and request a reinvestigation. If the new investigation reveals an error,
you may ask that a corrected version of the report be sent to anyone who
received your report within the past six months. Job applicants can have
corrected reports sent to anyone who received a report for employment
purposes during the past two years.
If the reinvestigation does
not resolve your dispute, have the credit bureau include your version
of the dispute (up to 100 words) in your file and in future reports. Remember,
there is no charge for a reinvestigation.
Accurate negative information
generally can be reported for seven years, but there are exceptions:
- Bankruptcy information can
be reported for 10 years;
- Information reported because
of an application for a job with a salary of more than $20,000 has no
- Information reported because
of an application for more than $50,000 worth of credit or life insurance
has no time limitation;
- Information concerning a
lawsuit or a judgment against you can be reported for seven years or until
the statute of limitations runs out, whichever is longer; and
- Default information concerning
U.S. Government insured or guaranteed student loans can be reported for
seven years after guarantor actions.
Have You Been Victimized?
Many states have laws strictly
regulating credit repair companies. The Illinois Attorney General's Office
may be helpful if you've lost money to credit repair scams.
If you've had a problem with
a credit repair company, don't be embarrassed to report the company. Contact
your local consumer affairs office or the Illinois Attorney General's
You may also may wish to contact
the Federal Trade Commission. Although the Commission cannot resolve individual
credit problems for consumers, it can act against a company if it sees
a pattern of possible law violations. If you believe a company has engaged
in credit fraud, send your complaints to: Correspondence Branch, Federal
Trade Commission, Washington D.C. 20580.
The National Fraud Information
Center (NFIC) also accepts consumer complaints. You can reach NFIC at
1-800-876-7060, 9 a.m. - 5:30 p.m. EST, Monday - Friday, or at http://www.fraud.org on the Internet. NFIC is a private, nonprofit organization that operates
a consumer assistance phone line to provide services and help in filing
complaints. NFIC also forwards appropriate complaints to the FTC for entry
on its telemarketing fraud database.
Need Help? Don't Despair
Just because you have a poor
credit report doesn't mean you won't be able to get credit. Creditors
set their own credit-granting standards and not all of them look at your
credit history the same way. Some may look only at more recent years to
evaluate you for credit, and they may grant credit if your bill-paying
history has improved. It may be worthwhile to contact creditors informally
to discuss their credit standards.
If you can't resolve your credit
problems yourself or you need additional help, you may want to contact
a credit counseling service. There are non-profit organizations in every
state that counsel consumers in debt. Counselors try to arrange repayment
plans that are acceptable to you and your creditors. They also can help
you set up a realistic budget. These counseling services are offered at
little or no cost to consumers. You can find the office nearest you by
checking the white pages of your telephone directory.
In addition, nonprofit counseling
programs sometimes are operated by universities, military bases, credit
unions, and housing authorities. They're also likely to charge little
or nothing for their services. Or, you can check with your local bank
or consumer protection office to see if it has a list of reputable, low-cost
financial counseling services.
Even if you don't have a poor
credit history, it's a good idea to conduct your own credit check-up,
especially if you're planning a major purchase, such as a home or car.
Checking in advance on the accuracy of the information in your credit
report could speed the credit-granting process.
Credit bureaus usually are
listed in the yellow pages of your telephone book under "credit reporting
agencies." Three large national credit bureaus that supply most credit
reports are: TRW, Equifax, and Trans Union. You may want to contact each
of them for a copy of your report.
Credit Information Services, Inc.
Union Consumer Relations
West Sproul Road, P.O. Box 390
* Courtesy of The Federal Trade