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Credit Repair Scams

There is no shortage of companies claiming they can repair your credit report. You are probably familiar with many of the headlines, such as ‘free credit repair’, ‘repair your credit history’ and ‘bad credit repair services’, but the truth is such claims are usually empty promises that lure the unsuspecting consumer into nothing short of a scam.

Some companies even boast that they can remove bankruptcies, CCJs and IVAs from your credit file. In reality, no company has the ability to legally delete legitimate entries from your credit history. If you have genuine disputes with entries on your credit file, visit How to Correct a Credit Report for details on how to take appropriate action.

Consumers with a patchy credit history usually rely on credit repair companies to help them get a mortgage, loan or car. Many credit repair companies are willing to exploit the financially vulnerable by charging extortionate fees for a service they are unable to deliver. Inevitably, rather than improving credit, consumers often end up deeper in debt.

How do Credit Repair Companies work?

Typically, there are three steps to the process:

1) You submit your credit reports from both major credit reference agencies – Experian and Equifax – to the credit repair company.
2) The credit repair organisation then decides which items are up for dispute.
3) The credit repair company promises to contact the credit reporting agencies and have questionable entries removed.

So what’s the catch?

Nobody can legally remove accurate information from a credit report. Credit reporting agencies are obligated by law to correct or delete inaccurate, incomplete, or unverifiable information, usually within 30 days. The only legal basis for a credit reference agency to remove correct information is if it is over seven years old, or ten in the case of bankruptcy.

Incomplete or inaccurate information on your credit file can be disputed, for details on how to do this visit How to Correct a Credit Report. Credit reference agencies are obliged to investigate a correction claim free of charge. Bear in mind a credi repair company can do no more than what for you can do for yourself. By correcting any misinformation on your file yourself, you stand to save hundreds or even thousands of pounds in fees.

“Repair my Credit”

Repairing your own credit report isn’t nearly as complex as you may think, but at the same time it is important you understand how it works. Visit our pages on How to Improve Your Credit Score for some helpful guidelines.

If on the other hand you simply don’t feel up to the task you can acquire the help of a professional. Credit repair companies aren’t always reputable so keep the following points in mind.

How to spot a credit repair scam

  • Companies that want you to pay for credit repair services before they do any work. Credit repair companies cannot ask for payment until they have completed the services required of them.
  • Companies that do not explain your legal rights including what you can do for yourself.
  • Companies which ask you not to contact a credit reference agency.
  • Companies who suggest you invent a “new” credit identity.
  • Companies that advise you to dispute accurate information in your credit report or take any action that seems illegal ie, like creating a new credit identity.

Consequences of acting illegally

If you use a credit repair agency who establishes a new credit identity in order to create a clean credit history, you could serve a jail sentence for fraud. Golden rule: Carefully read every document before signing.

Your contract must specify:

  • The payment terms for services.
  • Details of services to be performed.
  • Length of time to achieve results.
  • Your rights.
  • The company’s name and business address.

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