The marketplace is full of so-called “Credit Repair” companies that make promises that sound too good to be true. They claim to specialize in making bad marks on your credit history disappear or giving you an entirely new and clean credit history. They may scare you into believing that if you have bad credit, you will never be able to obtain future credit with out their help. Don’t believe it! The wise old saying says, “If it sounds too good to be true, it probably isn’t”.
First of all, some of these agency’s tactics are illegal, putting you in the position to unknowingly commit credit fraud. One tactic they use is known as “file segregation”, in which the consumer is instructed to obtain an Individual Taxpayer Identification Number (ITIN) or an Employee Identification Number (EIN) and use them in the place of their Social Security Number. This is a violation of federal law and getting in trouble with the law definitely will NOT help your financial situation!
Secondly, there is NOTHING a credit repair agency can do to repair your credit history that you can’t do yourself, with a little know-how, determination and dedication. However, if you don’t have the time or the means to perform a credit repair, there are reputable credit agencies that can help, but you need to know your rights first. By law, a credit repair agency must inform you of all your legal rights concerning the repair. They are not permitted to charge a fee until their services have been completed, so don’t pay for anything up front. You must be presented with a written proposal detailing all the services to be performed, how long the process will take, any guaranteed results, and the final cost. The proposal must include a provision for a 3-day window in which you can cancel the service at no charge. You have the right to sue the agency for actual loss and punitive damages if you suspect fraud.
Check out or report a credit repair company at:
Better Business Bureau of New Jersey
If you are a do-it-yourself person, here are some guidelines to follow to make the most of your efforts.
STEP 1: GET A COPY OF YOUR CREDIT REPORT
Anytime you take out a loan, are late with a payment on a loan, or have a tax problem the big 3 credit bureaus are notified. Incidents are added to your record and will stay there for 7 to 10 years, unless you take action to get them removed.
You are entitled to one free credit report per year
IMPORTANT: You are entitled to one free credit REPORT per year, which is very informative and helpful in examining your credit record and seeing what the creditors see when they run an inquiry, however, your REPORT does NOT contain your credit score. You will have to pay a small amount ($6-$8) to receive your credit score along with your report.
3 Major Credit Bureaus:
Note: The credit bureaus are not governmental agencies. They are for-profit business entities that are not favorable to increasing their workload for no return. They will do everything in their power to dissuade you from pursuing credit repair. Do not count on getting any help from them in regard to your credit repair beyond simply obtaining your report from them.
It makes no difference if the debt has been paid off. If you were late or the account went into collections at any time, there is a record of it on your credit report, and your score will reflect it.
STEP 2: ANALYZE YOUR CREDIT REPORT
You may have collections, liens, charge-offs, foreclosures, judgments, repos on your credit report. You may think that paying them off right away is the first step to getting your credit repaired, BUT WAIT. This is not necessarily true. Paying these accounts WILL NOT help your credit score. Why? The negative record appears on your report for up to 7 years no matter if it’s paid or not. The better solution is to conditionally settle the debt, with the agreement that the lender will delete the listing from your credit report. Be sure to get this in writing and do not take no for an answer. They will more than likely tell you that this cannot be done, but it most certainly can. You just have to be persistent and ask talk to the right supervisor.
You will see codes on your credit report made up of numbers and/or letters, ordered by their importance, that are intended to call attention to areas of your credit history that need further examination, however, more times than not, they are strictly used by lenders to provide a reason for declining a consumer that does not meet the lending criteria. According to the Equal Credit Opportunity Act, when declining credit, a lender can't just tell you "Your score wasn't high enough", or "You didn't meet our internal standards." A statement of specific reasons must be provided, or you must be advised of your right to demand specific reasons. Credit scoring with reason codes helps the lender provide this information.