Stupid Ways to Spend Your Money #2 - Credit Repair Service

Stupid Ways to Spend Your Money #2
Credit Repair Service

This is a continuation of my post “Have you ever purchased …?”

..Some products, services, and investments that are highly advertised (even here on gather.com) are simply bad and expensive products, things with many fine prints, and some are simply run as scams and fraudulant schemes.  I will bring out main points, and describe the remedy to get rid or out of them.

..Repairing your score could take months, so get started sooner rather than later if you'll need a loan in the near future. But don't pay anyone to help you fix your credit report or score.

Seven Signs of a Scam - You could be getting scammed if any of the following is true:

1. You aren’t given a copy of the “Consumer Credit File Rights Under State and Federal Law” letting you know your rights to obtain a credit report and dispute inaccurate credit report information.
2. You aren’t given a copy of contract to view before you’re asked to sign it.
3. The contract doesn’t contain the following information:
   • The amount you are being charged
   • Details about the services being performed on your behalf
   • The date by which the services will be performed (or the time period required to perform the services)
   • The name and business address of the organization
   • A statement letting you know you can cancel contract within 3 days
4. You’re asked for payment before the services have been performed
5. The company promises to remove accurately reported information from your credit report
6. The company promises to create, or asks you to create, “new” identity with new social security number or federal employer identification number (EIN)
7. You’re asked to sign a form waiving your rights under the Credit Repair Organizations Act (CROA)

Pros and Cons of Credit Repair Service

• Con: Time - Fixing a credit report takes time and patience. The process of ordering credit reports, carefully examining them, searching for errors and addressing any found, gathering evidence to dispute the errors and then writing letters to each of the three major credit bureaus (Equifax, TransUnion and Experian) is extremely laborious. Negative items should be ranked according to the severity of damage they do to your credit report. For example, a bankruptcy ranks higher in the damage department than a credit inquiry.
• Con: Delayed Resolution - Many individuals don't achieve the results they're looking for the first time around and assume they cannot improve their reports further. Consumers can make additional attempts to have negative items removed from their reports by providing and gathering more evidence and writing more letters, but most don't put forth the effort. Credit bureaus are required by law to address and resolve disputes within 45 days.
• Con: Scams - Many people attempting to fix their credit scores or reports end up dealing with disreputable organizations or websites that offer promising results for a certain amount of money. Scams are common, and consumers need to be very careful about the companies they approach to help them with credit repair issues.
• Pro: Reduced Debt - Many improve their credit scores by paying off debt over time, which reduces the amount of total debt that person owes. Lower balances on credit cards also offer lower interest rates and a lower debt-to-income ratio.
• Pro: Improved Credit Scores -Removing negative items from an individual's credit report may increase a credit score substantially, making it possible for her to enjoy lower interest rates on credit cards, auto financing and home loans.

Remedy: If you’re considering a credit repair service, keep in mind there is legally nothing a credit repair company can do to improve your credit that you can’t do yourself. Many of these companies promise to remove harmful negative information from your report. If the information’s wrong, you have the right to dispute it off your report. You only need to write the credit bureau providing the report. However, when the information is correct, you don’t have the right to dispute it, nor does a credit repair company.

..You might not be prosecuted for disputing correct information on your credit report, but you can be prosecuted for fraud if you lie on a credit application. For example, it’s fraud to answer “no” that you have never filed bankruptcy when you actually have. Just because you, or the credit repair organization you hired, disputed the bankruptcy from your credit report doesn’t mean the bankruptcy never existed.

..Learn from your mistakes, and never to rack up debts any more.  Save up emergency fund, and use debit card.  Save up and pay cash for purchases.  If you don't have the money, you can't afford it.  Most of all, spend less than you earn.

Next post will discuss Cash Advance / Payday loan / Title pawn

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