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Credit Repair Companies and Credit Counseling
Let's be crystal clear, right up front. Paying someone to
"fix" your credit is a waste of your time and money, since the
negative issues that are temporarily removed from your file will
only reappear again in a couple of months.
Be careful with credit repair scams.
Most "credit repair" companies really don't help. In fact, you
can improve your credit more effectively on your own. By using
credit repair companies, you may also be opening yourself up to
identity theft, unsolicited emails, and direct mailings. Protect
yourself; don't ever share your personal information with
strangers or give up your right to handle your own financial
affairs as you see fit.
Another important point: credit counselors only promise to get
you out of debt, not to improve your credit. Some companies will
have you send them a check every month, out of which they're
supposed to pay your creditors for you. However, some credit
counselors will often pay your bills late, which means that your
credit report soon becomes filled with "over 30 days late"
notations and your credit score drops even lower than it was.
"Debt negotiators," posing as non-profit organizations, can
ruin your credit even further, advising you not to pay your
credit card bills at all. They also charge upfront fees,
maintenance fees, and monthly fees, all of which are supposed to
be placed in a "trust" account. Then, after many months have
passed, debt negotiators finally convince creditors to settle for
less money than was owed, making yours an "uncollectible
account."
That tactic not only ruins your credit, due to the many "over
90 days late" remarks and collections notations, but all the
money you supposedly saved -- which was actually money you owed
-- will be considered as income by the IRS! In other words, if
you owed $20,000 and settled for $12,000, you'd be required to
list the $8,000 difference as income!
Credit repair companies promise to help clear up your credit
problems. They write letters to credit bureaus, stating that
various listed information is false, so the agencies will remove
that information while they investigate your account. During that
time, the credit repair company sends you a clean credit report,
thereby giving you the false impression that you now have good
credit. But after you've paid off the credit repair company,
you'll discover that all the negative items will soon reappear on
your report.
Remember: only incorrect items must be removed from your
credit report if they're proven to be false. If the black marks
on your credit report are correct, no one can have them removed,
regardless of what credit repair companies may try to tell you.
Working with collectors to remove negative remarks is possible,
but that's another article.
Some credit repair agencies can probably do a reputable job
removing items that are truly incorrect, such as: items after a
bankruptcy that should have been removed, double items,
children's items on parents' reports, and paid-off items that
still show past due. Some people really just don't like dealing
with this kind of thing, so a reputable credit restoration
company can help with these problems.
If you're seeking legitimate financial help to buy a home, the
best place to turn is to a mortgage broker. They're the ones who
can offer you the best FREE advice for settling credit disputes
and problems, so when you find yourself in difficulty, consider
using a mortgage broker as your credit counselor.
(c) Copyright 2004, Jeanette J. Fisher. All rights
reserved.
Professor Jeanette Fisher, author of Doghouse to Dollhouse for
Dollars, Joy to the Home, and other books teaches Real Estate
Investing and Design Psychology. For more articles, tips,
reports, newsletters, and sales flyer template, see http://www.doghousetodollhousefordollars.com/pages/5/index.htm
MORE RESOURCES:
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