October 2008

Credit Repair: How To Help Yourself

Y ou see the advertisements in newspapers, on

TV, and on the Internet. You hear them on the
radio. You get fliers in the mail, and maybe even
Recognizing a Credit
Repair Scam
Everyday, companies target consumers who have
calls offering credit repair services. They all make the
poor credit histories with promises to clean up
same claims: their credit report so they can get a car loan, a
home mortgage, insurance, or even a job once they
“Credit problems? No problem!”
pay them a fee for the service. The truth is, these
“We can remove bankruptcies, judgments, liens, and companies can’t deliver an improved credit report for
bad loans from your credit file forever!” you using the tactics they promote. It’s illegal: No
“We can erase your bad credit — one can remove accurate negative information from
100% guaranteed.” your credit report. So after you pay
them hundreds or thousands of
“Create a new credit identity — No one can remove dollars in fees, you’re left with the
legally.” accurate negative same credit report and someone
The Federal Trade else has your money.
information from
Commission (FTC) says do If you see a credit repair offer,
yourself a favor and save some your credit
report. here’s how to tell if the company
money, too. Don’t believe these behind it is up to no good:
claims: they’re very likely signs of
a scam. Indeed, attorneys at the nation’s consumer n The company wants you to pay for credit repair
protection agency say they’ve never seen a legitimate services before they provide any services. Under
credit repair operation making those claims. The fact the Credit Repair Organizations Act, credit
is there’s no quick fix for creditworthiness. You can repair companies cannot require you to pay
improve your credit report legitimately, but it takes until they have completed the services they have
time, a conscious effort, and sticking to a personal promised.
debt repayment plan. n The company doesn’t tell you your rights and
what you can do for yourself for free.
2 FTC Facts For Consumers

n The company recommends that you do not incomplete. There is no charge for this. Some people
contact any of the three major national credit hire a company to investigate on their behalf, but
reporting companies directly. anything a credit repair clinic can do legally, you can
do for yourself at little or no cost. According to the
n The company tells you they can get rid of most
Fair Credit Reporting Act (FCRA):
or all the negative credit information in your
credit report, even if that information is accurate n You’re
entitled to a free report if a company
and current. takes “adverse action” against you, like denying
your application for credit, insurance, or
n The company suggests that you try to invent a
employment. You have to ask for your report
“new” credit identity — and then, a new credit
within 60 days of receiving notice of the action.
report — by applying for
The notice will give you the
an Employer Identification
name, address, and phone
Number to use instead Anything a credit repair number of the consumer
of your Social Security
number. clinic can do legally, you reporting company. You’re also
entitled to one free report a
n The company advises can do for yourself at year if you’re unemployed and
you to dispute all the plan to look for a job within
little or no cost. 60 days; if you’re on welfare;
information in your credit
report, regardless of its or if your report is inaccurate
accuracy or timeliness. because of fraud, including identity theft.

If you follow illegal advice and commit fraud, n Each of the nationwide consumer reporting
you may find yourself in legal hot water, too: It’s a companies — Equifax, Experian, and
federal crime to lie on a loan or credit application, TransUnion — is required to provide you with
to misrepresent your Social Security number, and to a free copy of your credit report once every 12
obtain an Employer Identification Number from the months, if you ask for it. The three companies
Internal Revenue Service under false pretenses. You have a central website, a toll-free telephone
could be charged and prosecuted for mail or wire number, and a mailing address for consumers
fraud if you use the mail, telephone, or Internet to to order the free annual credit reports the
apply for credit and provide false information. government entitles them to. To order, click on
annualcreditreport.com, call 1-877-322-8228,
Your Rights Regarding or complete the Annual Credit Report Request
Credit Repair Form and mail it to:
No one can legally remove accurate and timely Annual Credit Report Request Service
negative information from a credit report. The law P.O. Box 105281
allows you to ask for an investigation of information Atlanta, GA 30348-5281
in your file that you dispute as inaccurate or
 FTC Facts For Consumers 3

Sample Dispute Letter

You can use the form in this
Date
brochure, or you can print it Your Name
from ftc.gov/credit. You may Your Address,
order reports from each of City, State, Zip Code
the three consumer reporting
Complaint Department
companies at the same time, Name of Company
or you can stagger your Address
requests, ordering one from City, State, Zip Code
each company throughout Dear Sir or Madam:
the year from the central
address. Don’t contact the I am writing to dispute the following information in my file.
The items I dispute also are encircled on the attached copy of the
three nationwide consumer
report I received.
reporting companies This item (identify item(s) disputed by name of source, such
individually or at another as creditors or tax court, and identify type of item, such as credit
address because you may account, judgment, etc.) is (inaccurate or incomplete) because
end up paying for a report (describe what is inaccurate or incomplete and why). I am
that you’re entitled to get for requesting that the item be deleted (or request another specific
free. In fact, each consumer change) to correct the information.
Enclosed are copies of (use this sentence if applicable and
reporting company may
describe any enclosed documentation, such as payment records,
charge you up to $10.50 to court documents) supporting my position. Please investigate this
purchase an additional copy of (these) matter(s) and (delete or correct) the disputed item(s) as
your report within a soon as possible.
12-month period.
Sincerely,
n Itdoesn’t cost anything Your name
to dispute mistakes or
Enclosures: (List what you are enclosing.)
outdated items on your
credit report. Under the
FCRA, both the consumer reporting company Helping Yourself
and the information provider (that is, the Step 1: Tell the consumer reporting company, in
person, company, or organization that provides writing, what information you think is inaccurate.
information about you to a consumer reporting Include copies (NOT originals) of any documents
company) are responsible for correcting that support your position. In addition to providing
inaccurate or incomplete information in your your complete name and address, your letter should
report. To take advantage of all your rights under identify each item in your report you dispute;
the FCRA, contact the consumer reporting state the facts and the reasons you dispute the
company and the information provider. information, and ask that it be removed or corrected.
You may want to enclose a copy of your report, and
4 FTC Facts For Consumers

circle the items in question. Send your letter by company is not permitted to put the disputed
certified mail, “return receipt requested,” so you can information back in your file unless the information
document that the consumer reporting company provider verifies that it is accurate and complete.
received it. Keep copies of your dispute letter and The consumer reporting company also must send
enclosures. you written notice that includes the name, address,
and phone number of the information provider.
Your letter may look something like the one on
If you ask, the consumer reporting company must
the previous page.
send notices of any correction to anyone who
Consumer reporting companies must investigate received your report in the past six months. You
the items you question also can ask that a corrected copy
within 30 days — unless of your report be sent to anyone
they consider your A consumer reporting who received a copy during the
dispute frivolous. They past two years for employment
also must forward all the company can report purposes.
relevant data you provide most accurate negative If an investigation doesn’t
about the inaccuracy
to the organization information for seven resolve your dispute with the
consumer reporting company,
that provided the years and bankruptcy you can ask that a statement of
information. After the
information provider information for 10 years. the dispute be included in your
file and in future reports. You also
receives notice of
can ask the consumer reporting
a dispute from the
company to provide your statement to anyone who
consumer reporting company, it is required to
received a copy of your report in the recent past. You
investigate, review the relevant information, and
can expect to pay for this service.
report the results back to the consumer reporting
company. If this investigation reveals that the Step 2: Tell the creditor or other information
disputed information is inaccurate, the information provider, in writing, that you dispute an item. Be
provider has to notify the nationwide consumer sure to include copies (NOT originals) of documents
reporting companies so they can correct it in that support your position. Many providers specify
your file. an address for disputes. If the provider reports the
item to a consumer reporting company, it must
When the investigation is complete, the
include a notice of your dispute. And if you are
consumer reporting company must give you the
correct — that is, if the information is found to be
results in writing, too, and a free copy of your
inaccurate — the information provider may not
report if the dispute results in a change. If an item
report it again.
is changed or deleted, the consumer reporting
 FTC Facts For Consumers 5

n perform any services until they have your

Reporting Accurate
Negative Information signature on a written contract and have
When negative information in your report is completed a three-day waiting period. During
accurate, only the passage of time can assure its this time, you can cancel the contract without
removal. A consumer reporting company can paying any fees.
report most accurate negative information for seven Before you sign a contract, be sure it specifies:
years and bankruptcy information for 10 years.
n the payment terms for services, including the
Information about an unpaid judgment against
you can be reported for seven years or until the total cost
statute of limitations runs out, whichever is longer. na detailed description of the services the
To calculate the seven-year reporting period, start company will perform
from the date the event took place. There is no
n how long it will take to achieve the results
time limit on reporting information about criminal
convictions; information reported in response to n any guarantees the company offers
your application for a job that pays more than
n the company’s name and business address
$75,000 a year; and information reported because
you’ve applied for more than $150,000 worth of
credit or life insurance.
Have You Been Victimized?
Many states have laws regulating credit repair
companies. State law enforcement officials may be
The Credit Repair
helpful if you’ve lost money to credit repair scams.
Organizations Act
Don’t be embarrassed to report
Credit repair organizations
a problem with a credit repair
must give you a copy of the
“Consumer Credit File Rights Just because you have company. While you may fear
that contacting the government
Under State and Federal Law” a poor credit report could make your problems
before you sign a contract. They
also must give you a written doesn’t mean you won’t worse, remember that laws are
in place to protect you. Contact
contract that spells out your be able to get credit. your local consumer affairs
rights and obligations. Read
office or your state Attorney
these documents before you sign
General (AGs). Many AGs have
anything. And before signing, know that a credit
toll-free consumer hotlines; check the Blue Pages of
repair company cannot:
your telephone directory for the phone number or
n make false claims about their services www.naag.org for a list of state attorneys general.
n charge you until they have completed the
promised services
6 FTC Facts For Consumers

If You Need Help for bankruptcy relief. You can find a state-by-
Just because you have a poor credit report doesn’t state list of government-approved organizations at
mean you can’t get credit. Creditors set their own www.usdoj.gov/ust, the website of the U.S. Trustee
standards, and not all look at your credit history the Program. That’s the organization within the U.S.
same way. Some may look only at recent years to Department of Justice that supervises bankruptcy
evaluate you for credit, and they may give you credit cases and trustees. Be wary of credit counseling
if your bill-paying history has improved. It may be organizations that say they are government-
worthwhile to contact creditors informally to discuss approved, but do not appear on the list of approved
their credit standards. organizations.

If you’re not disciplined enough to create a Reputable credit counseling organizations can
workable budget and stick to it, to work out a advise you on managing your money and debts, help
repayment plan with your creditors, or to keep you develop a budget, and offer free educational
track of your mounting bills, you might consider materials and workshops. Their counselors are
contacting a credit counseling organization. Many certified and trained in the areas of consumer credit,
credit counseling organizations are nonprofit and money and debt management, and budgeting.
work with you to solve your financial problems. But Counselors discuss your entire financial situation
remember that “nonprofit” status doesn’t guarantee with you, and can help you develop a personalized
free, affordable, or even legitimate services. In fact, plan to solve your money problems. An initial
some credit counseling organizations — even some counseling session typically lasts an hour, with an
that claim non-profit status — may charge high fees offer of follow-up sessions.
or hide their fees by pressuring consumers to make
“voluntary” contributions that only cause more debt. Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors
Most credit counselors offer services through
and consumer advocates recommend reviewing your
local offices, the Internet, or on the telephone. If
credit report periodically for three important reasons:
possible, find an organization that offers in-person
counseling. Many universities, military bases, 1. The information in your credit report affects
credit unions, housing authorities, and branches whether you can get a loan or insurance —
of the U.S. Cooperative Extension Service operate and how much you will have to pay for it.
nonprofit credit counseling programs. Your financial
2. It’s important to make sure the information is
institution, local consumer protection agency, and
accurate, complete, and up-to-date before you
friends and family also may be good sources of
apply for a loan for a major purchase like a
information and referrals.
house or car, buy insurance, or apply for a job.
If you are considering filing for bankruptcy, be
3. It can help you deter, detect and defend
aware that bankruptcy laws require that you get
against identity theft. That’s when someone
credit counseling from a government-approved
uses your personal information — like your
organization within six months before you file
 FTC Facts For Consumers 7

name, your Social Security number, or your n Building a Better Credit Report — Learn how
credit card number — to commit fraud. to legally improve your credit report, how to
Identity thieves may use your information deal with debt, how to spot credit-related scams,
to open a new credit card account in your and more.
name. Then, when they don’t pay the bills, the n Knee Deep in Debt — Discusses options to help
delinquent account is reported on your credit you get back in the black, including: realistic
report. Inaccurate information like that could budgeting, credit counseling from a reputable
affect your ability to get credit, insurance, or organization, debt consolidation, or bankruptcy.
even a job.
n Fiscal Fitness: Choosing a Credit Counselor —
For More Information Defines debt repayment plans, explains the
To learn how to improve your credit worthiness differences between secured and unsecured debt,
and find legitimate resources for low or no-cost and offers questions to ask credit counseling
help, please see the following publications at agencies if you consider using their services.
ftc.gov/credit. The FTC works for the consumer to prevent
n Your Access to Free Credit Reports — Explains fraudulent, deceptive, and unfair business
why it is important to monitor your credit practices in the marketplace and to provide
history, how to request a report, and how to information to help consumers spot, stop, and
dispute errors. avoid them. To file a complaint or to get free
information on consumer issues, visit ftc.gov or
n How to Dispute Credit Report Errors — call toll-free, 1-877-FTC-HELP (1-877-382-4357);
Explains how to dispute and correct inaccurate TTY: 1-866-653-4261. The FTC enters consumer
information in your credit report. Includes a complaints into the Consumer Sentinel Network,
sample dispute letter. a secure online database and investigative tool used
by hundreds of civil and criminal law enforcement
agencies in the U.S. and abroad.

Federal Trade Commission

Bureau of Consumer Protection
Division of Consumer and Business Education
 Annual Credit Report Request Form
You have the right to get a free copy of your credit file disclosure, commonly called a credit report, once every 12 months, from each of
the nationwide consumer credit reporting companies - Equifax, Experian and TransUnion.
For instant access to your free credit report, visit www.annualcreditreport.com.
For more information on obtaining your free credit report, visit www.annualcreditreport.com or call 1-877-322-8228.
Use this form if you prefer to write to request your credit report from any, or all, of the nationwide consumer credit reporting companies. The
following information is required to process your request. Omission of any information may delay your request.
Once complete, fold (do not staple or tape), place into a #10 envelope, affix required postage and mail to:
Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281.
Please use a Black or Blue Pen and write your responses in PRINTED CAPITAL LETTERS without touching the sides of the boxes like the examples listed below:
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 0 1 2 3 4 5 6 7 8 9

Social Security Number: Date of Birth:

- - / /
Month Day Year
Fold Here Fold Here

First Name M.I.

Last Name JR, SR, III, etc.

Current Mailing Address:

House Number Street Name

Apartment Number / Private Mailbox For Puerto Rico Only: Print Urbanization Name

City State ZipCode

Previous Mailing Address (complete only if at current mailing address for less than two years):

House Number Street Name

Fold Here Fold Here

Apartment Number / Private Mailbox For Puerto Rico Only: Print Urbanization Name

City State ZipCode

I want a credit report from (shade

each that you would like to Shade here if, for security
Shade Circle Like This > reasons, you want your credit
receive):
report to include no more than
Equifax the last four digits of your
Not Like This >
Experian Social Security Number.
TransUnion

If additional information is needed to process your request, the consumer credit

reporting company will contact you by mail. 31238
Your request will be processed within 15 days of receipt and then mailed to you.
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