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How To Identify A Legitimate Credit Repair Company

By Janet Lacey
Published: Monday, November 30th, 2009

With a large number of Americans finding themselves in bad credit situations, credit repair agencies are having a field day. Unfortunately, a majority of these so called credit repair firms are frauds, which have been created only to cheat hapless citizens out of their money. With promises of mending bad credit within a short period of time, these credit repair agencies lure people with bad credit. 

If you are also in a bad credit situation that you want to improve on an ASAP basis because you want to change jobs or apply for a loan, then you may be tempted to use the services of a credit repair agency that promises to remove bad credit. 

However, since a large number of these firms are a scam, it is mandatory to check that you are dealing with a legitimate organization (yes, there are a number of those too), before you give someone the important task of improving your credit. Legitimate credit repair companies will not make a lot of optimistic promises or charge a lot of money upfront. If you want to check whether the company you are dealing with is legitimate or not, then here is a checklist of what it will do or not do. 

Things That A Legitimate Credit Repair Firm Will Do: 

  1. Provide you with a copy of the “Consumer Credit File Rights under State and Federal Law” when you approach them. This document lists all the steps that you can take by yourself to improve your credit.
  2. Tell you about your rights and inform you about ways of improving your credit yourself.
  3. Draw up a contract for you to sign which contains the following information– the total amount you will be charged, the list of services that the credit repair firm will perform for you, the time period during which these services will be carried out, an option to cancel the contract within 3 days of signing and the registered name and address of the firm. All of these are crucial pieces of information that need to be on the contract to save you from being scammed. So double check for these before you sign on the dotted line. 

Things That A Legitimate Credit Repair Firm Will “Not” Do: 

  1. Ask for an upfront payment before any services have been performed. This is illegal under the CROA.
  2. Make promises that even accurate but negative pieces of information will be removed from your credit report.
  3. Ask you to get a new Employer Identification Number, which will be used for creating a new identity. This is the shortcut way of getting a new, clean credit identity which sounds good, but can land you in jail for a number of years because it is totally “illegal”. Run from the firm that says this is legal or legitimate, because in the end, it all translates into felony for the law.
  4. Claim to remove tax liens, debts and bankruptcies from your credit report, even though the time for the same has not elapsed.

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