Credit repair financial scams are common; but they are all built on lies

The advertisements often promise amazing things, such as the “credit you have always dreamed of” or “we will remove negative entries on your credit report in three months.”  These advertisements are common, as companies try to take advantage of the tens of thousands of Americans who have overextended themselves financially. It’s hard repairing your credit; it can take years to rebuild the damage done by paying just a few bills late or by exceeding your limit on your credit card. These companies promise, for a fee, to make all of the problems go away.

There is just one problem with this scenario - it doesn’t work. There is no such thing as a “quick credit fix.” Why not? Because, by law, there is no way you can remove accurate information from a credit report. You can, through a dispute, have information that is incorrect removed, but you must be prepared to show documentation proving that the information is incorrect. If the information is true, then it must stay.

That means that paying a company $500-700, which is the typical fee, to remove your three late payments from your credit report will do nothing. The company will take your money and you will be stuck. The Federal Trade Commission has had enough of these claims, and they have recently shut down twenty different companies that were making these and other similar promises to their paying clients. This crackdown, known as “Project Credit Despair” began after the FTC accumulated thousands of complaints from consumers who had been swindled by companies that promised a quick fix to their problem credit. Of course, none of these companies delivered what they promised to provide - a clean credit report.

Most of these scams involve one or more of the following:

• Trying to overwhelm the credit bureaus by filing a dispute regarding every single piece of information contained on the report.
• Trying to create a new “credit identity” by using an Employer Identification Number instead of a Social Security Number.
• Urging you not to pay any of your debts because of a supposed law that states that lending at interest is illegal.

None of these schemes work. It is perfectly legal for your creditors to extend credit to you and they have every right to expect to be repaid on time. Creating a new identity doesn’t work either, since the computerized systems of the credit bureaus will eventually put two and two together and decide that you and your new identity are one and the same. And disputing everything will slow down the system for a while, but eventually your creditors will provide proof that the information is accurate, and then you are just stuck.

These companies have been shut down, but others remain and others will take their places as long as people believe or want to believe in some quick, effortless way to obtain good credit. There is only one way to fix your credit - don’t overspend, and pay your bills on time. That’s it. Anything else is just an empty and expensive promise.

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