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Credit Repair or Counseling Agencies May be Dangerous

July 12, 2007 | Author: admin | Filed under: Credit Counseling

Credit Repair or Counseling Agencies May be Dangerous
By Phillip Collinsworth

Credit repair or counseling agencies may be dangerous to your fiscal well-being.

“Credit Counseling” and “Commercial Counseling” services are two completely different things. Before you sign any papers that end up causing you even more financial harm, you better know whom you are dealing with!

Whereas credit counseling services are generally non-profit, commercial counseling services (clinics) may charge you 10%-15% or more of your total debt, with a $300 upfront fee being typical. Meanwhile, the services provided by the non-profit agency are basically the same as for profit organizations, and neither can guarantee results.

Just about everyone at one time or another has experienced some kind of problem with their cash flow. That is when it becomes difficult to pay the monthly bills and keep up with credit obligations. When that happens, damaging information may begin to appear in your credit file, and bad times can become even worse.

For many people it becomes difficult, if not impossible to obtain any further credit, just when there is a desperate need for it. Unfortunately, banks, lenders, and other creditors do not extend credit on the basis of need. Credit can swiftly be taken away from anyone who cannot demonstrate they are a good credit risk.

Most people can be successful in overcoming credit rejections that have resulted due to damaging information showing up on a credit report. The problem that most people run into is that they become desperate and will resort to anything and anyone that comes along with false promises. Then they find themselves in deeper trouble because they’ve handed out more money they don’t have, to a crook who gives them nothing in return.

Giving yourself a grand-slam, clean-credit slate doesn’t happen by accident. There are a number of techniques and methods that can be utilized to create or restore a good credit record.

The following information is being provided to you on the basis that it has proven successful for some people. None of the information is being recommended as techniques you should use. If you decide to use any of the information contained in this report, it is recommended that you first consult with an attorney to obtain legal advice.

The best advice on the subject of credit repair comes from the Federal Trade Commission (FTC). According to the FTC, marketing claims such as those listed below are almost always scams, or outright misleading:

· “Credit problems? No problem!”

· “We can erase your bad credit — 100% guaranteed.”

· “Create a new credit identity — legally.”

· “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

The FTC suggests you do yourself a favor and hold on to your money. It sounds depressing, and may be a bit discouraging, but true credit repair takes time and a conscious effort to repay debts in a timely manner. Sadly, many people end up paying hundreds, if not thousands, of dollars to so-called credit repair agencies, only to find themselves in the same boat they were before hiring the repair agency.

If you can’t be swayed to avoid working with a credit repair agency, at the very least, heed the following warning from the FTC:

· companies that want you to pay for credit repair services before they provide any services.

· companies that do not tell you your legal rights and what you can do for yourself for free.

· companies that recommend that you not contact a credit reporting company directly.

· companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.

· companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

Bear in mind, playing games with the credit bureaus is serious business, and may cause you to incur an expensive and possibly freedom restricting trial. In other words, changing your identity, using fake Social Security numbers, etc, are fraudulent acts that the federal government frowns on. Also, if you use the phone or mail to apply for credit under less than honest circumstances, you may also be prosecuted for mail or wire fraud. Nasty stuff—federal prosecution.

Phillip Collinsworth is the author of several books available on Amazon. He hosts a website offering free information on wealth building, and finding income opportunities through Internet marketing. Visit: http://www.wealthsearch.org

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