Be Wary of the “Easy Credit Fix”

If you’re in a difficult financial position, you may be enticed by one of the many advertisements popping up in every media: “We WILL erase your bad credit—it’s easy!”

The Federal Trade Commission has seen these same advertisements, but their message is different.

In a 2005 alert to consumers, the FTC warned that messages of guaranteed credit repair were out-and-out false.

Credit Scams

For those facing the intimidating prospect of bankruptcy, credit repair scams seem irresistible.

Bankruptcy is a process that makes sense for some, but it’s no picnic, and credit repair scammers take advantage of a creditor’s understandable apprehension and promise a quick, easy fix.

These credit scams target individuals who may be too desperate to read the fine print and realize that credit repair can often be an empty promise.

In fact, the FTC has partnered with state law enforcement agencies in eight states to go after dozens of credit repair operations making dubious claims.

The targeted scammers claimed they could wipe negative information off of a consumer’s credit report even if the information was correct. The FTC has imposed stiff fines on companies caught making false claims, but many others continue to operate, taking advantage of the growing plight of families struggling against the recession.

According to the FTC, the following information can help you avoid these scammers:

  • Avoid working with a company that wants you to pay up front before they have provided their services – this is illegal
  • Stay away from companies who aren’t direct with you about your legal rights or evasive when you ask what you can do on your own
  • Don’t work with a credit repair service that wants to keep you from contacting a credit reporting company on your own
  • Don’t be lured in by a company that proposes contesting all of the information on your credit report, regardless of accuracy

Remember, you cannot legally adopt a new “credit identity”; and following illegal advice that involves you in the commitment of fraud and may expose you to criminal charges.

But there is some good news. As challenging as bankruptcy is, the credit repair companies claim that bankruptcy will surely crunch your credit for ten years is not true.

Bankruptcy and Credit

Your bankruptcy filing will likely appear on your report, but its impact on your credit score and lender availability can decrease steadily over time, as you develop a positive payment history.

It will take sound planning skills and discipline, but most people can rebuild their credit within 18-24 months of their bankruptcy filing.

There’s a time-tested adage: if something sounds too good to be true, it probably is.

Talk to a bankruptcy attorney about how Chapter 7 bankruptcy could potentially affect your future.