Today it is hard to miss the signs of economic challenges that are having an impact on families across the country. From the sub-prime loan debacle and recent record gas and home utility prices to higher grocery bills, a now-confirmed recession, and growing layoff and employment concerns, there are very few of us who have been able to escape at least some of these complications of daily life. For some, however, the current situation has created a "perfect storm" of economic disaster that has resulted in decisions such as which bills have to be paid and which can wait until more money is available. This dangerous cycle can soon lead to missing payments on installment loans, mortgages, and consumer credit cards. Before you know it, bills you let go for a week or two in order to free-up some much needed cash become 30, 60, and then 90-days delinquent. It is at that point that your credit history takes the hit and begins to show the effects with lower credit scores and, subsequently, higher interest rates on future loans and increased difficulty in securing future loans.
In many cases where people are in dire straits, there always seems to be a menacing, predatory element out there just waiting to take advantage of those who are temporarily down on their luck. In case of credit problems, consumers should show caution with so-called "credit restorers" or companies that promise, for a fee, to help consumers with bad credit eliminate negative aspects of their credit report and bring them back into good credit standing. As the nationwide economic crisis becomes more apparent, television, newspaper, radio, and Internet advertisements making statements such as, "Credit problems? No problem!", "We can erase bad debt—100% guaranteed!", and "We can remove bankruptcies, judgments, liens, and bad loans from your credit file—forever!" seem to pop up more and more frequently.
When it comes to the promises of such credit repair companies, the Federal Trade Commission (FTC) advises consumers, "Don't believe these claims: they're very likely signs of a scam." The FTC adds that its attorneys say they have never seen a legitimate credit repair operation making claims such as those stated previously. According to the FTC, such companies target consumers who have poor credit histories with the promise of being able to clean up their credit report so they can get a home mortgage, insurance, a new car loan, or even a job—once the consumer pays the company a fee for their services. The FTC adds that the truth of the matter is that such companies can't deliver an improved credit report using the tactics they state, because such actions are illegal. No company or person can remove accurate negative information from your credit report. So after paying a company hundreds or even thousands of dollars in fees for such services, consumers are left with the same bad credit report situation, less money in their pockets, and an even worse financial situation.
If your family financial situation has you considering credit repair services, the FTC provides the following tips that will help indicate if a company behind a credit repair offer is "up to no good":
The FTC adds that if you follow the illegal advice of such credit restorers, you may also be held legally responsible. It is 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. Doing so could result in your being charged with and prosecuted for mail or wire fraud if you use the Internet, telephone, or mail to provide false information and apply for credit.
Although there is no way to legally remove timely and accurate information from your credit report, the Fair Credit Reporting Act (FCRA) provides you with steps and means by which you can investigate the information in your credit report file and dispute any items that are inaccurate or incomplete—and there is no charge for this process. The FTC adds that anything a credit repair operation can do legally for a fee, you can do for yourself at little or no cost. According to the FCRA:
The FTC notes that if you contact the companies directly for your credit report, you may end up paying a fee up to $10.50 for something your are entitled to receive for free. Also, note that the website www.annualcreditreport.com is the only site on which you may request your free reports. In many cases, there are imposter sites that mimic the free credit report site with slightly different website addresses, and have hidden fees for other services tied to your request for free reports— type carefully or link to the site directly from the FTC's website (www.ftc.com).
There is no cost to dispute mistakes and/or outdated information in your credit report. Under the FCRA, both the consumer reporting company and the person, company, or organization that provides information about you to a consumer reporting company, are responsible for correcting inaccurate or incomplete information in your report. The FTC website (www.ftc.gov) is an excellent source of information regarding the steps you need to take to correct erroneous information in your credit report. So, educate yourself, be responsible with your family's finances, and periodically monitor your credit report. Then you'll be prepared to act upon any questionable data on your own without an outside source that may be costly and/or illegal.
As with any financial matters, consult with your financial consultant or tax advisor for advice concerning your particular situation.
Articles are provided for the general interest of our readers. Gerber Life Insurance is not responsible for any content and recommends that you consult the appropriate professional with any questions or concerns you may have concerning any financial or health related issues.