| Bad Credit Repair Assistance |
| By Credit Federal |
Published
10/2/2008
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Financial Tips
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Bad Credit Repair Advice Regarding the Credit Repair Organizations Act
With the ever-changing credit market and new government regulations, you may feel unqualified to perform your own credit repair. But, first of all, you should be aware that there is nothing a credit repair company can do; legally, that you cannot do yourself. However; if you still prefer to hire a professional, be smart and don't be a credit repair scam victim.
Did you know? Not only can a bad credit report deny you loan approval, it can also affect the interest rate you'll pay if you do get approved. For example: If you get approved for a bad credit card with a 24% interest rate, to payoff a $10,000 balance in 5 years would cost you 287.69 per month (with $17,260.22 total interest paid). If you got the same credit card but at a good credit 17% interest rate, you'd pay only $248.54 per month to payoff the $10,000 balance in 5 years (with only $14,911.07 total interest paid. That's $2,349.15 less than a 24% rate). Order your annual free credit report to check for and to fix errors.
Credit repair organizations are governed by a law known as the Credit Repair Organizations Act, which is a federal law that requires any credit repair service to fulfill certain obligations to you. You should avoid any credit repair service that doesn't follow these rules.
Make sure the credit repair company follows these basics:
- Gives you a copy of the 'Consumer Credit File Rights Under State and Federal Law' letting you know your rights to obtain a credit report and to dispute inaccurate credit report information.
- Gives you a copy of the contract to review before asking you to sign it, and the contract contains:
- The amount you are being charged
- Details about the services being performed on your behalf
- The date by which the services will be performed (or the time period required to perform the services)
- The name and business address of the organization
- A statement letting you know you can cancel the contract within 3 days
- Won't ask for payment before the services have been performed
- The company won't claim the power to remove negative; yet accurate, information from your credit report*
- The company doesn't create, or asks you to create, a new identity with a new federal employer identification number (EIN) to escape your bad credit past
- The company won't ask; nor require, you to sign a form waiving your rights under the CROA
*Many scam credit repair companies promise to remove negative; but truthful, information from your credit report. If the information is 'wrong', you have the right to dispute it and to get it removed from your report. You only need to write the credit bureau reporting the error. However; when negative information is correct, you don't have the right to dispute it, nor does a professional credit repair company. Although you might not be prosecuted for disputing correct information on your credit report, but you can be prosecuted for fraud if you lie on a credit application. For example, it's fraudulent to claim you have never filed bankruptcy when you actually have. Just because you, or the credit repair organization you hired, disputed the bankruptcy from your credit report doesn't mean the bankruptcy never existed.
Credit repair scam victim? Report the organization to your state attorney general. Send a complaint to the Federal Trade Commission6 and the Better Business Bureau.
Before you hire a credit repair company, research with the BBB, FTC, and your state attorney general to find out if there are any existing complaints. Avoid companies that consumers have already complained about.
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