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Avoiding Common Credit Repair Scams

Dealing with Debt: Common Credit Repair Scams -- and How to Avoid Them

Your credit report and score are both essential parts of your financial portfolio. Having a high credit score, and a report free of blemishes will help you get better rates on a mortgage or automobile loan, and may even lower your insurance premiums.

Improving your credit score is an excellent way to improve your overall financial health, but there are some common credit repair scams you should be aware of. Take a look at the list below, which details a few of the most popular “credit repair” offers you should be wary of:

“Get a new Social Security Number”

The Claim: Get a new social security number, and a fresh start: Companies sell books or programs with “secrets” about how to improve your credit score by getting a new social security number. They claim getting a new number will give you a fresh start.

The Truth: You generally can’t get a new social security number. In very rare instances, a new number can be issued, but it is extremely rare, and a new number will not be granted simply because you are not happy with your credit score. Making up a new number, or simply using someone else’s number is fraud, so the “secrets” sold are worthless. Work on repairing your own credit, and you should see a score boost within a few months.

"Debt Consolidation"

The Claim: “We will negotiate with creditors on your behalf and reduce your debts…..for a fee”. These businesses (not to be confused with non-profit credit counseling services) promise to negotiate with your creditors, and reduce your debt. You pay the business an upfront fee, and pay them each month. The problem is that the negotiating techniques that these businesses use include not paying your creditors for months at a time. In theory, this makes them more likely to settle for less.

The Truth: Withholding payments from your creditors will damage your credit rating, and tank your score. Debt consolidation businesses often charge hefty monthly fees—fees you could be putting towards your debts. The best way to pay down your debts is to focus and pay your creditors directly—don’t waste money on an intermediary you don’t need.

“Let a computer do the work for you”

The Claim: “Our program will help you repair your credit”. Credit repair software helps you repair your credit by creating a debt repayment plan, and generating verification letters and dispute claims for your credit report.

The Truth: You can create a debt repayment plan and dispute negative items on your credit report all by yourself—for free! You do not need to spend hundreds or even thousands of dollars on a program to tell you how to do it. Gimmicks, tricks, and “magic” cures won’t work to repair your credit. If you are in financial distress and being hounded by debt collectors, we may be able to help. Avoiding scams is just the first step-- contact us to learn more about your options.