Credit Repair Companies - 10 Tips

The most important thing you should look for when searching for ethical credit repair services is the affiliations of the agency you are looking at. Every reputable company will be eager to share with you their references on request. Here are some pointers that you should keep in mind to protect yourself from deceitful credit repair companies.

1. The organization should have a membership in the Ethical Credit Repair Alliance (ECRA) or a similar organization. You It's often suggested to select companies who are members of the BBB (Better Business Bureau) when you are looking for any type of service. But when evaluating credit repair companies, those agencies that are members of the ECRA are always a good choice.

This body accepts only those members who agree to a stringent code of ethics and any business that gets their approval will do their work in the client's best interest. All credit repair companies that have membership in the ECRA will have to maintain high standards in dealing with their clients. This means protection for you, the consumer, from any kind of dishonest practices.

2. Know what credit repair is before seeking help. Most people who are cheated out of their hard earned money while they are seeking ways out of a financial jam, do not know anything about what repair of credit involves. It's important to know what these companies are able to do and what they are not able to do.

Only if you know the difference, will you be able to distinguish which companies are dishonest and which are not. For instance, no one can remove negative remarks entered on your credit report if these can be verified. There are numerous credit repair companies claiming they can completely clean your credit report in as little as a month. Think carefully; is this possible to do by legal means? If the answer is negative you had best pass on their services.

3. Never accept unsolicited offers by e-mail. When you get an e-mail offer to repair your credit, at the very time when you most need help, don't fall prey to the belief that divine intervention is somehow involved. These are from scammers who use shady methods to get your e-mail address, and send out emails to millions of unsuspecting victims in hopes of tricking someone in financial distress whom they can milk dry!

Don't fall for these e-mails. These are usually always these are crooked agencies trying to take advantage of people's desperation for their own profit. Reputable credit repair companies will make contact with you through e-mails or newsletters only when you have opted in to receive them.

4. Creating a "new identity" is illegal. This fallacy is believed by many people, mainly because it would seem to solve all their problems. This idea is so widely accepted due to a general ignorance regarding credit repair. This is called"File segregation." Avoid it like the plague - it's illegal!

A credit score is an aggregate of the history of your financial behavior from the day you became an adult until the present. So how could it be possible to get a "new" credit history?? So if you were to attempt it, doesn't it make sense that it can't possibly be legal? So it's glaringly obvious that the credit repair companies that propose to solve your problems by offering file segregation as a way out are not legitimate.

5. If an agency wants full payment prior to rendering any services, look out! The Credit Repair Organizations Act (CROA) stipulates that you need to have a detailed written contract from the agency beforehand and that payment be made only after services have been performed. You also have three days time to cancel the contract if you find it unsuitable.

Some companies may charge an upfront fee for credit report analysis or a consultation, and charge monthly fees after that as they continue to follow up with the credit bureaus. But if a company demands their entire fee be paid in advance, it may be because they are aware you will refuse to pay once you realize that they cannot do what they have promised they would. These agencies are scammers and you must not deal with them!

6. Repairing credit is a lengthy process. As we discussed, no reputable organization can solve your credit problems in the blink of an eye or delete derogatory accounts from your credit report if it is verifiable.

In a best case scenario, less serious issues can be fixed within two or three months, by correcting errors in your report, and through improving how you deal with your finances. More serious problems like foreclosures and the like stay on your credit report for 7 years, even with excellent financial management.

Bankruptcies cannot be removed for ten years. If you are given guarantees of a fast removal, you can be sure of fraud.

7. No contract, no pay! If you aren't offered a contract look for another company; under the law a written contract is your legal right.

Dishonest agencies would prefer there's no contract, and if they do there will be information missing in regard to the services, the amount of the payments, and so on. You will acquire an insight into these agencies by the contract they offer you. And if they do not offer a contract, don't deal with them.

8. If any guarantees are made, look out! Not even the most experienced organization can make guarantees as far as results of their credit services. They can assure you - after they study your report - that they will improve your score by any available legal means. But don't ever believe a company that guarantees results.

But an unfortunate fact of human nature is, people would rather hire a company that tells them what the want to hear, instead of hiring an agency that is truthful. Do not fall into this trap! Even though promises of results are more appealing, credit repair companies that offer guarantees regarding results are to be avoided.

9. See if there are counseling services. Many quality credit repair companies provide them for free.

If the company that you are considering to engage does not, try looking a little deeper. It might be an organization unworthy of your trust. All agencies of repute encourage and educate people on how to repair credit. The services the agency performs are for those matters that need professional intervention to clean up all derogatory errors on the credit report.

10. Bad advice? Beware! Some organizations will dispute all the negative entries on your credit report by claiming "this is not my account.." Although this may result in short-term improvement in your credit score, the creditors whose remarks are thus disputed may later counter it, and at a later time the bureaus will verify it.

Given the poor record keeping habits of the credit bureaus, it's highly likely that there are inaccuracies on your credit report. But credit repair companies that tell you to state "this account is not mine" although it really is, must not be trusted.

As you can see, there is no shortage of red flags to warn you against scams. The most important action you must take before hiring credit repair companies is to do your "homework" and learn about credit repair, what it is, what to expect, and what to avoid. In addition you need to educate yourself regarding laws pertaining to credit repair before looking for a credit repair company. A good way to begin is to visit the FTC Bureau of Consumer Protection website and the Ethical Credit Repair Alliance.