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Credit Repair

03:15:34 AM Thursday, July 19, 2007

Credit repair companies compete with credit card deals!

The United States has always been a place where entrepreneurial pursuits have been revered. However, all of these great small businesses that have popped up over time haven’t been that great. Not every business operates with honesty and integrity- a great example of this was the ‘snake oil’ scam in the 1800’s.

Back then the pharmaceutical companies touted snake oil as the cure all regarding every illness or disease out there. They said it could cure cancer and get rid of any cold! However as we know now, snake oil was just a scam that many pharmaceutical companies got rich off of- with no regard to the consumers benefits. But just like these companies of the 1800’s there are credit repair companies out there today who have no regard to their clients, just to their own benefit!

While yes, there are some good credit repair companies out there, it is the bad ones who have given the industry a bad reputation. These companies insist that they can improve your credit score in less than 48 hours and give you a new ‘identity.’

Consumers should be very wary of these companies because what they promise is actually either impossible or illegal. If you are in a tough spot when it comes to credit you should look for the legit companies that can help you- not the quick fixers that will only leave you in worse condition. Let’s look at the two biggest things to be wary about with credit repair companies:

1. Watch out for those who say they will ‘clean your credit up quickly.’ Credit repair companies know that people like quick fixes but when it comes to your credit there is no other way to fix out outside of time and good financial decisions. If you want excellent credit and the best credit card deals you will have to exercise discipline and patience with your spending.

If a credit repair company says they can clean up your credit report then they are lying. The Fair Credit Reporting Act states who can and can’t correct and fix your report. Credit repair companies have no legal right to fix your report so don’t trust them if they insist they can! There is very little to correct negative info on your report- if it is legit.

This is how credit repair companies actually work: They first look at your credit report and note any negative information. Then they will go ahead and dispute any and all of it, which takes it off your report temporarily while the claims are investigated. If you have poor credit then you will instantly have all your negative info released but, after investigation it will probably be re-entered.

Your better credit score is just a temporary thing and it will soon back-fire on you. Once your negative information has been added back, you will be left in a worse position and chances are you won’t be able to get a hold of your credit repair company- but this will be after you paid them!

While this may seem like a pretty complicated situation, many people fall prey to credit repair companies and their tricks. If you want to improve your credit and get the credit cards then you can only do it through being responsible and taking time.

2. You can’t just walk away from a poor credit history and start over! Some people are told by credit repair companies that they can easily walk away from their bad credit and start over. The one thing you just can’t get away from is the credit score you have earned for yourself.

Too many people want quick fix solutions and when the opportunity arises they want it! Starting over and getting a new identity is also known as file segregation and it is a federal crime.

This is where a person with poor credit applies with the Internal Revenue Service in order to get an Employer Identification Number (EIN). This number has the same number of digits as a Social Security Number and some people use it in order to apply for credit cards online.

They do this because the number isn’t linked to any credit score or history. The only problem is, this ploy will look very suspicious. Credit card companies see a person without a credit history and they get suspicious and bring in the federal government- this is where you get in trouble.

Some people believe that they can get away with this ploy but it rarely ever works because it is too easy to catch. While it is possible to obtain an EIN it isn’t the best thing to do to try and recover your credit.

The only way to recover a poor credit score is to have patience and diligence and work hard at paying your bills on time. Don’t fall prey to the credit repair companies who promise unrealistic things to you!