Bad credit? Don’t fall for these credit repair scams!

By: Allison Millar, Contributing Writer
In: Home mortgages
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If your bad credit is keeping you from getting a home mortgage, you might be tempted by credit repair ads. “Call today and get your credit cleaned up in 60 days.” “Remove bad credit in 3 easy steps.”

Credit Repair Scams

Is it a credit repair scam? Here’s how to tell:

  1. The company asks for payment in advance. The Credit Repair Organizations Act prohibits upfront payments.
  2. The company claims it will get rid of all negative information on your credit report and tells you not to communicate with the 3 credit reporting agencies.
  3. The company asks you to create a new credit identity by getting an employer ID number instead of using your social security number.
  4. The company does not tell you that you can repair credit for free yourself.

Before hiring a credit repair company, consider that:

  1. No one can remove negative information from your credit report if it’s accurate and timely.
  2. There are many credit repair steps you can do yourself–without an outside agency. With patience, you can improve your credit enough to qualify for a home mortgage. Try these tips from the Federal Trade Commission, including how to get a free copy of your credit report.

Credit Repair and Money Management

Credit repair comes down to managing your money more closely. Here’s how to get back on track:

  1. Make a monthly budget based on the past 3 months of spending and income.
  2. Look for ways to spend less-Can you buy in bulk to save on groceries? Carpool to lower traveling expenses?
  3. Find ways to boost your income. Despite a slow job market, there are part time jobs in retail or sales.
  4. Always pay bills on time or discuss delays with the creditor.

If you think you’ve been victimized, contact your state attorney general’s office with this list from the National Association of Attorneys General.

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