Credit Cleaning Companies: Illegal!
Beware the latest internet pitch: “Remove poor credit from your credit report immediately and permanently!”
Ten state attorneys general offices, 29 better business bureaus and the National Foundation for Credit Counseling recently went web surfing to find web sites that make the above claims. The Federal Trade Commission emailed the sites to let them know that their claims may violate federal and state statutes. Not only are claims of guaranteed credit repair false, but they may be expensive to clients — and place them in jeopardy of committing a felony.
The Tactics:
The credit cleaners take advantage of a practice known as “spamming” — sending out thousands of unsolicited emails with come-ons like "Erase your bad credit!" or "Start over with a clean slate.” What they don’t tell you is that the only way to erase bad credit is with time and effort, and that what they propose is not only illegal, it’s a felony with jail time.
One of the most common “strategies”: advising clients to apply for a new Social Security Number. Just so there’s no misunderstanding here — it’s against the law to apply for a new Social Security number to create a new identity. Another illegal scheme involves obtaining a federally issued nine-digit Employer Identification Number (EIN), or a Taxpayer ID number, and substitute that for your Social Security number.
Less fraudulent but still unethical methods the credit cleaners suggest include inundating credit bureaus with letters disputing all negative information on your credit report. By law, if a credit bureau does not respond to requests within 30 days, they must remove the disputed items from your credit report. The theory is that the bureau will be so busy answering all the frivolous claims that they won’t be able to review them all and therefore default on the 30-day limit. In response to the above technique, credit bureaus are now allowed to ignore frivolous requests from credit repair services.
Legal and Ethical Tactics You Can Do Yourself:
What credit cleaners don’t tell you is that instead of paying them, you can accomplish the same thing free of charge. How? Inaccurate info on your credit report can be removed easily with a simple phone call to the creditor. Be calm and respectful, never aggressive or angry, and you may be able to convince them to remove the bad mark on your credit report, especially if there were mitigating circumstances.
For more information, visit http://www.ftc.gov.