Credit Repair:

Is It Worth It?

 

I can't begin to tell you how many e-mails I receive from consumers wanting to know if they should spend $XXX [or more!] on getting their credit fixed.  Or "repaired."  Or "cleaned up."

 

The answer's easy: No.  No.  And no!

 

I've discussed this many times on the radio and on TV segments...and it's always fodder for the newspaper column a few times a year.  Why?  Because all of us want a quick fix in our lives.  Whether it's clearing your past mistakes off of your credit reports, or losing weight overnight, or getting rich in a few weeks, all of us are looking for that silver bullet or magic formula to help us reach our goals, what ever those goals may be.

 

Lemme try to head you off early and answer some of the most frequent questions about this topic.

 

Question #1

 

I found a company [or person] that guarantees they can clean up my credit, or my money back!  What do I have to lose?

 

Answer:  Your money.  It's one thing if Microsoft or the U.S. Government is making a "money back guarantee" offer.  At least you know they've got the dough to make good on their promise.  But just because a company promises that you'll get your money back doesn't mean that you will.  Who's holding the cash?  Unless it's some sort of escrow agent of substance, like a title company or a legitimate bank, don't waste your time.  You have zero assurance that you'll ever see you hard-earned cash ever again.

 

Question #2

 

I've been told that I can get a new Social Security Number and thus, a new credit profile?  One of the ways I've heard this can be accomplished is by signing up for an EIN: Employer's Identification Number...a number that any new company can get by filling out a form with the IRS.  It's a 9-digit number...just like the Social Security Number.

 

Answer: Nope, another scam.  In fact the authorities are really cracking down on people that attempt to use the EIN to obtain personal credit or start a new "credit file."  Another official sounding terms these clowns like to throw around is "file segregation."  (Another term for "we're gonna rip you off" in my book.)  Don't believe me?  Fine...it's your butt, not mine.

 

Question #3

 

I hear companies advertise on the radio all the time that make claims they can clean up my credit history; aren't they legitimate?  How else can they be out there advertising in the open if what they're doing is illegal?

 

Answer:  Companies that openly advertise in many cases walk a very thin line and operate in the gray area.  Every state has different laws on the books that govern credit repair type businesses; check the website of the Attorney General's office for your state.  Some states require businesses offering this service to post bonds with the state...Texas used to require a $10,000 [this may still be the case, I haven't checked recently].  Just because someone advertises on the radio does not mean they don't have unhappy clients.  Don't trust the Better Business Bureau to have all of the facts or complaints, either.  They're not the last word nor provider of current/breaking news on companies that may be having problems.

 

Just another friendly reminder: If it sounds too good to be true, then it is.

 

Question #4

 

But can a credit report be "cleaned up?" 

 

Answer: Without question, it's possible to force the credit bureaus to comply with federal laws [Fair Credit Reporting Act] and get old stuff off of a report.  And it's also possible to put the same bureaus into a position of having to verify something or force them to remove it.  Many companies are lazy and it's easier for them to just remove something that verify it.  But in many cases if you have something removed, it may very well pop back up a few weeks or even months later when the credit file is updated by the original creditor.  It's a cycle that can be repeated over and over, is frustrating as hell and many times, the best thing consumers have going for them is time.  And if someone wants to try to "clean up" their report, I'd rather they try it on their own than risk throwing hundreds--even thousands of dollars at a company that promises to do this for them.

 

Question #5

 

What do the authorities say about credit repair companies?  What's their take on what they offer?

 

Answer: There's a ton on info out there posted by the Federal Trade Commission; they're particularly vocal about companies promoting these services.

 

Question #6

 

Are there any decent books out there on the subject?

 

Answer: Yes, and I'm a big fan of books.  Everyone's got their own take and their own methods to deal with the credit bureaus.  And there's no right or wrong answer in my opinion; everyone's got their own line of reasoning or experience to back up their positions.  The biggest factor in favor of books on this topic?  It's a small investment [don't blow a bunch of dough on a book or a package with videos or audio tapes] and in most cases, if you don't like what you read, the book's returnable.  Small risk/potential big reward.  I also like books because it forces the consumer to understand how the system works, what a pain-in-the-butt having lousy credit can be and hopefully, once they wade into the battle with the credit bureaus, they'll be a little more reluctant to put themselves/get themselves into a similar situation in the future!

 

Question #7

 

Where can I find out more about this topic?

 

Answer: Aside from the links I've given you [above] to the best source on this subject: the Federal Trade Commission, you might wanna click here and peruse some of my past columns on the topic.