What is Credit Repair:
Credit Repair is considered by borrowers as:
Beware of credit Repair Scams. If you find offers of the nature below
The company wants you to pay for credit repair services before they
provide any services. Under the Credit Repair Organizations Act, credit
repair companies cannot require you to pay until they have completed the
services they have promised.
The company doesn’t tell you your rights and what you can do for yourself
The company recommends that you do not contact any of the three major
national credit reporting companies directly.
The company tells you they can get rid of most or all the negative credit
information in your credit report, even if that information is accurate
The company suggests that you try to invent a “new” credit identity — and
then, a new credit report — by applying for an Employer Identification
Number to use instead of your Social Security number.
The company advises you to dispute all the information in your credit
report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in
legal hot water, too: It’s a federal crime to lie 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. You could be charged and prosecuted for mail or wire
fraud if you use the mail, telephone, or Internet to apply for credit and
provide false information.
How to fix a bad credit
Request a copy of your credit report from a credit bureau. If there is an
error, write to the bureau and ask it to fix the mistake. It might also
help to contact the creditor who reported the error. Some creditors will
contact the bureau on your behalf.
If the bad marks on your credit report result from outstanding debts,
repay them as quickly as possible. Pay off those with the highest interest
If your debts are overwhelming, contact a nonprofit credit-counseling
organization to work out a debt-consolidation plan. A counselor will help
you consolidate your debts and will contact your debtors on your
behalf to reduce or eliminate finance charges. This can reduce your
monthly payments by up to 40 percent.
Steer clear of any services that offer you credit-repair or
debt-consolidation loans. These companies will plunge you further into
debt. Be suspicious of any company that advertises aggressively or sends
unsolicited mail or e-mail.
Close your credit accounts and cut up the cards. Sell valuables or
liquidate assets that will help you repay your debts. Buy the bare
essentials (food and gas) and use the rest of your earnings to pay off
your consolidated debts.
Work with your credit counselor to repay all of your debts. Meanwhile,
live a life that will help you re-establish good credit. Pay rent and
utilities or mortgages promptly, keep the same residence and job, maintain
savings and checking accounts, set a budget and stick to it.
Once you have repaid your debts, apply for a new credit card to build a
good credit history. It might be easier initially to get a
department-store or gasoline credit card or one from an employee credit
Promptly pay off the balance of the credit card monthly to build good
credit. Use the card responsibly
If you don't qualify for a regular credit card, apply for a secured one.
With a secured credit card, you fund an account up front and then "charge"
expenses on it. This card will show up as a credit card on your credit
report and, if used responsibly, can help you build a good credit history