You have seen the advertisements on television, read them in the classifieds and heard them on the radio: “Credit Problems? No problem!” “We can erase your bad credit – 100% percent guaranteed.” “Create a new credit identity.” These services are likely a scam. Companies offering 'free' credit repair services target consumers with poor credit histories. They make big promises to fix your credit so you can get a loan, insurance, or even a job in exchange for hundreds of dollars in fees. But these companies cannot fix your credit: in fact, it is illegal for a credit reporting agency to remove accurate negative information from your credit report. You pay hundreds of dollars for these so-called credit repair services, but in most cases receive nothing in return.
Recognize the Scam Before signing a contract for credit repair services, you should recognize the signs of a credit repair scam. You are likely being scammed if:
The company wants you to pay for credit repair services before it provides the services. Under federal law, these companies may not require payment before they have completed their services.
The company refuses to tell you your rights under federal and state law. If you know your rights, you can in most cases do for free what these companies offer to sell to you for hundreds of dollars.
The company instructs you not to contact any of the three national credit reporting agencies or www.annualcreditreport.com
The company tells you that it can remove negative accurate information. They can’t. It is illegal.
The company tells you to dispute accurate information in your credit report.
The company suggests that you create a new 'identity' by applying for an Employer Identification Number. It’s a federal crime to lie on a loan or credit application, to misrepresent your social security number, and to obtain an Employer Identification Number under false pretenses.
Get Your Credit Report Federal law requires each of the three consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every twelve months. There is one central website, a toll-free telephone number, and mailing address through which you can order your free credit report. There is only one government-authorized website: www.annualcreditreport.com
A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or filed for bankruptcy. Nationwide consumer reporting companies sell this information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or purchasing or renting a home. You should request a report to confirm that the information is accurate and to dispute any inaccurate information. You should also request a report to detect, deter, and dispute any fraud, including identity fraud.
Know Your Rights
You have the right to a free credit report, upon request, every twelve months. Request your free report from www.annualcreditreport.com, by calling toll-free 1-877-322-8222, or by mailing a completed Annual Credit Report Request Form to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
You have the right to a free credit report, upon request, if anyone takes an 'adverse action' against you, such as denying an application for credit, insurance, or employment. You must request a report, however, within sixty days after receiving notice of the action.
You have the right to a free credit report if you are unemployed and plan to look for a job within sixty days; if you are on welfare; or if your report in inaccurate because of fraud or identity theft.
You have the right to know if information in your credit report has been used against you.
You have the right to request a 'credit score'. Credit scores are numerical summaries of your credit-worthiness based on the information contained in your credit report.
You have the right to dispute any inaccurate or incomplete information in your credit file. Credit reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information from your credit report. They also may not report outdated negative information. It does not cost anything to dispute mistakes or remove outdated items on your credit report.
You have the right to limit access to your credit report. Under federal law, credit reporting agencies may not distribute your credit information to anyone without a valid need, usually to consider your application for credit, insurance, or employment. You must give your consent in writing for credit reports to be provided to current or prospective employers.
In addition to those rights, you should also know your rights if you choose to work with a credit repair organization. Credit repair companies must:
Give you a copy of the Consumer Credit File Rights Under State and Federal Law before you sign a contract. Any contract with a credit repair company must spell out your rights and obligations in writing.
Not make any false claims about their services.
Not charge you until they have completed the promised services.
Not perform any services on your behalf until they have your signature on a written contract and have completed a thee-day waiting period.
The following information does not constitute legal advice or representation, but is provided as a public service by the Dallas Association of Young Lawyers (“DAYL”) and is for educational purposes only.
Made possible by a generous grant from the Texas Bar Foundation.
