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:
 China Daily | Fallout From TJX Credit Card ... InternetNews.com - By Andy Patrizio: More stories by this author: The indictment of 11 criminals involved in the TJX credit card theft incident shows that cybercrime is indeed ... Video: Feds Charge 11 in Massive Retail Hacking Case Credit card thieves ran a polite, professional help desk 11 charged over US credit card theft |
 Earthtimes (press release) | US Consumer Credit Increases $14.3 Billion in June (Update2) Bloomberg - Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion, the Federal Reserve said today in Washington. In May, credit rose by $8.1 ... Consumer credit rose $14.33 bln in June US consumer credit rose at double the pace forecast in June Consumers release their credit cards from musty wallets |
 Washington Post | Here comes the credit crackdown Independent, UK - One year into the credit crisis, regulators are hard at work on new laws they hope will prevent history repeating itself. Leading investment banks fear a ... Industry group to address credit risk Panel Calls for New Risk Standards Banking Group Proposes Wide Range of Reforms |
The End of Credit Card Consumerism U.S. News & World Report, DC - For more than four decades, our shopaholic nation has shown an insatiable desire to spend until our credit cards melt. And throughout this era, ... |
 Reuters | Credit Suisse auction-rate debt suit may start frenzy Reuters - ST Micro alleges in the August 6 complaint filed in federal court in Brooklyn, New York, that by late 2006 Credit Suisse knew that collateralized debt ... Fannie Mae expects smaller credit losses in 2009 Credit crunch cripples European insurers' profits UPDATE 1-CS reinitiates IT hardware sector with "market weight" |
Credit crunch and banks: from the Rock to a hard place Times Online, UK - The News at Ten on September 13 last year was the first taste most Britons had of the credit crunch. But since mid-2006 the City had heard warnings from ... Many happy returns, credit crunch Credit crunch: Around the world The butterfly effect: How a blip became a credit crunch |
Credit Suisse Sued Over Auction-Rate Securities (Update3) Bloomberg - 7 (Bloomberg) -- Credit Suisse Group, Switzerland's second-biggest bank, was sued by Swiss semiconductor company STMicroelectronics NV for allegedly placing ... STMicro sues Credit Suisse over auction-rate debt Credit Suisse sued by semiconductor firm Credit Suisse sued over 'auction' debt |
 Boston Globe | Credit expenses lead to $2.3 billion loss for Fannie MarketWatch - The company reported credit-related expenses of $5.3 billion in the quarter, which more than offset revenue of $4 billion. Fannie Mae also took a charge of ... Fannie Mae posts $2.3 billion loss as credit costs rise Fannie: Sun will come out tomorrow Fannie Mae Posts Fourth Straight Loss, Cuts Dividend (Update2) |
 Boston Globe | Credit cards: US authorities charge 11 in global identity theft racket guardian.co.uk, UK - American authorities have uncovered a global computer hacking and credit card fraud ring spanning the US, eastern Europe and Asia, officials said. ... Gang charged for theft of 41 million credit card numbers 11 charged in connection with credit card fraud Retail Hacking Ring Charged for Stealing and Distributing Credit ... |
Settling the credit score CNNMoney.com - Having a good credit rating is more important now than ever, but determining exactly what yours is gets complicated. By Jessica Dickler, CNNMoney.com staff ... The FICO Score- Unregulated Discrimination? Back-to-school shopping tips |
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