5 common credit repair scams

These are some of the credit repair scams that we must be wary of.

Scam 1. "We will give you a new credit identity." This cannot be done legally.

The phony credit repair companies will use every trick of the book to convince you that for a fee, they can create a new credit identity for you. What these people do is they will direct you to contact the Internal Revenue Service (IRS) and ask you get hold of an Employer Identification Number (EIN) for the purpose of building a new credit history. The EIN is the identifying number that corporations use much in the way individuals use their Social Security number. Then these companies advice you to:

• Make use of the EIN instead of your Social Security number to apply for a new credit or in a loan application.
• use a new mailing address; and
• Get hold of new credit references.

Scam 2. “We have an ‘in’ with the three national credit reporting agencies and they will help us in deleting all the unfavorable information in your report”

This is completely untrue. Any third party can not legally remove accurate negative information from your report. What these so called credit repair clinics do is that they dispute the negative entries that are accurate in your report with the bureau. The bureau may list the debt as disputed while it investigates the dispute, during the course of investigation the debt may disappear for a short while. The credit repair company shows this temporary "clean" report to you to collect its fee. But what you do not know that the debt will resurface again after the investigation.

Scam 3. “We can talk with your creditors and convince them that the debt is really not yours.”

The way this one works is similar to the previous scam. The scam artists come up with a scheme that requires you to flood the creditor with a plethora of disputes. But challenging the debt is not a way that will persuade the creditors to drop the claim.

Scam 4. “We will help you in erasing your bad credit as well as help you in getting a home mortgage through our contacts.”

Con artists trap the desperate consumers by promising them the much needed money or loans with better interest rates. They might mask themselves as credit counseling agencies having contacts with mortgage companies to accomplish such frauds. But in reality these so called mortgage companies are equity skimmers trying to take away your home and money.

Scam 5. “Call our handy 900 number for getting more info on how to fix your credit.”

While you are looking for help by calling the mentioned number, the con artists will keep you on the line as long as possible and make money from the per minute charges.

I know it is really saddening that fraudsters prey on those who really need help....but this is the truth. In my opinion all of us should update ourselves so that no body can steal away our hard earned money.

Nelly