It is particularly despicable when companies prey on people who are in financial distress. Unfortunately, there is no shortage of such companies. Just take a look at the mortgage industry and the current economic recession we are in. With so many people facing foreclosure on their homes, there has been a huge rise in foreclosure prevention scams and similar rip-offs.
For a long time, there has been a predatory side of the credit industry as well. In particular, I’m talking about credit repair companies and the bold (and often false) promises they make.
You Can Fix Your Own Credit Reports
Let me start with the absolute truth at the core of my argument. There is no company on the planet that has special powers over your credit report. The only thing these “repair” companies can do is help you make corrections to your credit report, which is something you can easily do for yourself. In fact, there are hundreds of articles online (from reputable sources) that can help you make such corrections. And you can do it for free — without spending a dime on anything.
Credit Repair Scams Tracked by the FTC
A lot of the so-called credit repair companies will make bold promises about what they can do, and they will make it seem as if they have special access to the reporting bureaus. This is simply not the case. How do I know this? Because the FTC investigates more complaints against this industry than just about any other industry. Visit the FTC website and do a search for credit repair, and you’ll quickly see what I mean.
My best advice is to scratch the word “repair” from your credit dictionary, and replace it with the word “counseling.” Better yet, replace it with the phrase nonprofit counseling, because there are plenty of these services available all over the United States. A nonprofit credit counselor will help you make corrections to your credit report and otherwise improve your financial situation, and they will do it for little or no cost.
A credit repair company, on the other hand, will generally ask for upfront fees because they know they cannot deliver on their bold promises. Consider yourself warned and educated on this dirty little secret of the credit industry.
Citation Note: The original version of this article was written by Brandon Cornett. Brandon is the publisher of the Home Buying Institute, which includes one of the largest libraries of mortgage advice for home buyers.