Boulder Real Estate Blog November 8, 2017

Credit Repair Scams

As the economy and the real estate market show hopeful signs of improvement, opportunities continue to abound for prospective homebuyers. However, the jury’s still out on whether or not lenders will begin to loosen their lending criteria…and to what degree. Improving your credit profile will be integral to securing a mortgage and moving forward on that home you’ve been eyeing.

The good news is, there are many proactive steps you can take to repair less-than-perfect credit—but it will take time. Unfortunately, there are many bogus organizations who claim they can fix your credit problems quickly. It’s important that you understand fact from fiction before proceeding with any such firm.

The Federal Trade Commission (FTC ) offers the following red flags to watch for from a credit-repair service:

Claim: The company wants you to pay for credit repair services before they provide any services.
Fact: Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the credit repair services they promised.

Claim: The company doesn’t tell you your rights and what you can do for yourself for free.
Fact: The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. This investigation doesn’t cost any money.

Claim: The company recommends that you don’t contact any of the three major national consumer reporting companies (Equifax, Experian, and TransUnion) directly.
Fact: Under the Fair Credit Reporting Act (FCRA), the consumer reporting company and the information provider (the person, company, or organization that provides information about you to the consumer reporting company) must correct inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider in writing.

Claim: The company tells you they can get rid of most or all the negative credit information in your credit report, even if the information is accurate and current.
Fact: Any credit repair company that claims to be able to legally remove accurate and timely information from your credit report is lying. There’s no easy fix for bad credit. Improving your credit takes time and a conscious effort to pay your debts.

Claim: The company suggests that you apply for an Employer Identification Number to use instead of your Social Security number so you can invent a “new” credit identity – and then, a new credit report.
Fact: If you follow illegal advice like this, you may find yourself in hot water. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, or to get an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.

Your real estate professional or financial advisor can point you in the right direction for learning the specific steps you can take to repair your credit. They can also suggest lending options that might be available to you.