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Credit Repair Factsheet - A Guide For Debt-Burdened Consumers

Mar 12, 2009
The economic catastrophe engulfing the world, combined with a reliance on credit cards and poor spending habits have skyrocketed the number of consumers with bad credit. If your credit is bad, if your credit report reads like the latest horror novel, then it's highly likely that you are being contacted by credit repair agencies. These agencies make huge promises, enticing you with the lure of rebuilding your credit, simply and easily. They promise to wipe the slate clean, allowing you to start over once more and omit the mistakes of the past.

If this sounds familiar, don't be tempted. According to US federal law, this type of credit repair is impossible - any company or entity urging you to change your Social Security number or promising that they can dissolve your debt issues is selling something that you do not want. At best, this arrangement leads to you paying enormous sums of money with no discernable benefits. At worst, it sees you facing criminal charges as accessory to a crime.

While your credit can be repaired legitimately, and credit repair companies do exist that can help you, they are far outnumbered by hucksters and charlatans. How do you recognize such a fraud for what it is? How do you safeguard your credit from further problems?
Credit Disputation - While you are entitled to dispute inaccurate or incomplete information on your credit report, any company advising you to dispute everything on the report should be avoided.

Removing Negative Information - If a credit-rebuilding company promises that all negative information from your credit report can be removed, it is best to find another option. Legitimate negative information cannot be removed.

Your Rights - You have many rights when it comes to your credit and your credit report. Any company that does not inform you of these rights, or that you can take every step they can, should be avoided.

Upfront Payment - If a company promises you big results, but wants upfront payments, chances are good that they are not legitimate. Under US federal law, you do not have to pay until they have completed the promised services.

Credit Bureaus - If a credit repair company advises you not to obtain a copy of your credit report from Equifax, TransUnion and Experian, they should be avoided. It is your right to obtain one copy of your credit report from each credit bureau, once per year.

New Identity - If a company wants you to change your Social Security number or make use of an EIN, you should leave them alone. This is illegal and you can find yourself facing criminal charges in a court of law.

Of course, legitimate credit repair options do exist. Many consumers find it simpler to obtain the assistance of an actual company for the process, but it should be noted that consumers can take every step available to these companies on their own. You are entitled to dispute items on your credit report that you feel are inaccurate or incomplete, directly with the credit bureaus, enabling you to remove items that should not be there. You are also entitled to negotiate better terms with your creditors.

Disputing and negotiation do not cost anything, allowing you to begin rebuilding your credit at no charge, whatsoever. However, be aware that the road back to creditworthiness can be long and arduous - you will have to learn proper spending habits and adhere to them, as well as learning how to follow a budget and using your credit in the proper manner. A credit counseling service can help you learn these vital skills and get back on your financial feet.
About the Author
Jacob Hertz is a regular blogger and writer on the credit industry for BadCredit.com. His articles on credit repair and bad credit always accurately depict the status of the credit market for both consumers and lenders.
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