Resolve to spit-shine credit report in 2009
NEW YORK – Getting your credit report in shape in 2009 is a sound New Year’s resolution. Just make sure you’re not reeled into any scams.
With a deepening recession leaving more people in financial distress, fraudulent services promising to scrub credit reports of unflattering information are rampant. Just last year, the Federal Trade Commission saw a 50 percent spike in complaints about such businesses.
“There are bad actors everywhere. And they’re crawling out from under their rocks for the holidays,” said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, an association of non-profit counselors.
Services billing themselves as credit doctors and credit clinics, for instance, can’t really improve your report, she said. The truth is, if the negative information is accurate, nobody can get it removed – not even you.
That doesn’t mean you shouldn’t resolve to spit-shine your credit report in 2009. Credit reports are regularly pulled by potential employers, landlords and lenders.
Watch for scams
If you encounter a service promising to remove negative data from your report, it’s probably safe to assume it’s a scam. That’s because a debt collection can stay on your credit report for up to seven years. A Chapter 7 bankruptcy, the most common type which wipes clean unsecured debt such as credit card bills, can be reported for up to 10 years.
In fact, FTC spokesman Steve Baker said he’s never seen a legitimate credit repair operation.
“I won’t say it can’t exist. But I’ve never seen one,” he said.
The details might differ, but Baker said “the basic essence of the scam is the same.” It goes something like this:
In exchange for payment, the service promises to pester credit bureaus until negative items on your report are taken off. The premise is that the credit bureau will eventually grow weary and remove the items.
If you believe you were duped by a credit repair company, call the FTC at 1-877-FTC-HELP.
Do it yourself
The bottom line is that improving your credit report will take effort and commitment on your part, said David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, an association of non-profit counselors.
The first step is checking your credit report regularly for errors or collections you didn’t know about.
The three national credit reporting agencies – Equifax, Experian and TransUnion – are legally required to provide you with a free copy of your report once every 12 months. You can request your copy at Annualcreditreport.com, but be careful of sites with similar names.
Annual credit reports are free, but you have to pay if you want your credit score.
Enlist a credit counselor
If your debt is too daunting to handle on your own, consider visiting a credit counselor. Consultations are usually free. There might be minimal monthly fees of about $20 for certain services, but you can get them waived if you can’t pay.
Hundreds of non-profit groups offer financial counseling on topics, including mortgages, credit card debt and budget planning. To find one in your area check the Web sites of either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
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