Watch Out for Fast Credit Repair Scams

With Americans’ credit scores plunging after record numbers of mortgage and credit-card delinquencies, companies that promise quick fixes, eliminating negative information in credit-bureau files, are proliferating, say federal officials. The pitches are especially attractive to homebuyers and mortgage applicants because they offer a way to raise credit scores enough to get loan applications accepted, and even to qualify for lower interest rates. But two new legal settlements by the Federal Trade Commission suggest seductive “credit repair” come-ons can lead consumers into costly credit rip offs. Both cases involve companies that allegedly claimed they could remove any negative information from consumers’ files. One even said it could do so because it had special inside contacts with lenders and credit bureaus. Successful Credit Service, based in Woodland Hills, Calif., allegedly promised it could erase bankruptcies, missed payments, tax liens and other damaging credit-file data permanently.

“We fix the credit 100 percent guaranteed whether it is a bankruptcy or a 30-day late,” said one of the company’s Internet ads cited by the FTC. “It does not matter how low or how big it is; anything that’s on there, we can remove.” The company could achieve these results, ads said, partly because of the “priceless relationships we have with every creditor, collection company, public-records provider and credit bureaus. We deal directly with these institutions in order to eradicate the problem at the source.” To sign up, consumers had to pay $3,000 to $4,000 upfront. When and if you decide to have a company “fix” your negative credit report, just make sure you know what your getting into up front. Double check the various companies out and make sure about any hidden fees. The last thing you want is to get into further debt.