Beware of Credit Repair

Credit repair companies are not allowed to take money up front before they do any work. They're not supposed to make false claims about their services. They must tell you that you have three days to cancel and then honor that waiting period. And they have to give you a written contract that includes the price, the precise services they are offering you, the length of time it will take to get results, any guarantees and the company's official name and business address.

Scam credit repair companies should not be confused with legitimate credit re-scoring companies, which I will be profiling on "Good Morning America" this week. Re-scoring is available only through your mortgage lender. And here's the difference: Credit re-scoring involves rapidly correcting mistakes in your credit record to raise your score. Re-scoring professionals will not try to change negative credit entries that are true.

Know the signs:

1. Credit repair companies advertise directly to consumers on the radio, the Internet and on telephone poles!

2. They claim they can quickly fix your credit situation, no matter how atrocious it really is. These grandiose claims are one of the signs to watch out for.

3. If a company asks you to pay for credit repair services up front, that's a bad omen, indeed, because it's illegal.

4. Credit repair companies often discourage you from contacting the credit bureaus directly.

5. If somebody suggests that you apply for an employer identification number and use that instead of your Social Security number when you apply for credit, that's a telltale sign of fraud.

6. Credit repair scammers may advise you to dispute all the information in your credit report, even entries you know are true.

Do your homework:

1. If, after reading this column, you still somehow believe a credit repair company could be legit, then for goodness sake, check out the company with the Better Business Bureau and your county and state consumer protection offices. Also type the name into an Internet search engine and see what comes up.

2. Consider disputing errors in your credit history yourself for free! Start by ordering your free credit reports from www.annualcreditreport.com.

How to complain:

Since credit repair companies operate illegally, contact your state attorney general if you have been victimized. Also file a complaint with the BBB to help other consumers.

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