Credit repair’ companies seem to abound on the radio, the internet and on late night TV. You probably have at least the following questions and observations about them.
Well, let’s address these one at a time…
It depends upon what you mean by “work.” (Sounds like a famous president, huh?) They certainly don’t work the way they claim (“remove all negative information from your credit history;” “increase your credit scores instantly;” erase late pays, repossessions and foreclosures from your credit report;” etc.). They can only erase them if they are erroneously on you credit report in the first place. This is kinda’, sorta’ what you will read in their advertising literature:
BIG PRINT : WE WILL QUICKLY REPAIR YOUR CREDIT AND ERASE ALL THE BAD STUFF
(little print) but only the stuff that should not have been there in the first place.
At best, these credit repair companies’ ads are misleading. At worst they are downright lies (some companies do not even provide the fine print; certainly not in their radio and internet ads.) In any event, you don’t need to spend any money on them, because you can do on your own what they claim to be able to do for you. They charge fees. You don’t need to pay any fees.
After you send them your money, they will send you essentially the following information (using many more pages and words than I am going to use):
Actually, some companies will provide you (for your fee) your credit reports directly to you (step 1), and will mail the “request for correction” forms on your behalf to the credit bureaus (step 3). But the cost for that service (many times the actual cost of the report) far exceeds the real benefit to you.
The companies will also provide you the following advice, again in many more pages and words: Pay your bills on time in the future and shortly, but no later than 7 years, all of your “bad information” will fall of your credit report. Guaranteed! Zounds. Can they really guarantee that? Well, yes, because after seven years, bad credit info (other than bankruptcy, which stays on for 10) automatically, by law, can not be reported. So, you see, nothing is being done by these companies that you cannot do yourself.
Well, they may be successful, but that has nothing to do with whether or not they can do what they claim to do. Lots of people throw lots of money at diet pills, diet programs, diet camps, which promise unbelievable health benefits, but still don’t lose any weight. Some diet product (and vitamin, and health food, and, well you get the picture) companies are incredibly prosperous. Similarly, lots of people throw lots of money at companies promising unbelievable credit benefits. They will take your money, churn out more ads, take more money, and then close up shop. It’s as simple as that. Don’t hire a credit counselor unless the counselor meets one of the following conditions:
After bankruptcy, you may receive solicitations from companies promising to restore your credit scores, to cancel out the effect of bankruptcy and even promising to erase the bankruptcy filing from your credit record. Again, the fine print might say:
“We can only remove erroneous reports of bankruptcy filings. If you actually filed for bankruptcy, then such cannot be removed from your credit history.”