How to Avoid Credit Repair Rip-offs

As the major credit issuers continue to raise interest rates, fees, and payments many card holders will be looking to transfer balances to companies with, for example, lower minimum payments and fixed interest rates.

For those with solid credit scores, finding new issuers that will accept balance transfers at agreeable terms will prove to be much easier than for card holders with low credit scores, large balances, and/or high ratios of debt to available credit.
For many, the inability to transfer accounts that have suddenly become too expensive to maintain will provide the motivation to seek credit repair in an attempt boost their credit scores. One form of credit repair comes in the form of offers for major credit cards at a small fee. The cards are then used as a means to show consistent payments as a step toward rebuilding a credit score. Like any situation where a combination of need and desperation exist, there will be companies that use the situation to take advantage of consumers that don’t look before they leap.
Make no mistake, there are companies that provide these types of cards for a square deal, but signing up with the ones that aren’t can be costly in terms of money and the further damage done to credit scores. The key is to know what to look for:
* Hidden Fees – Just about every credit card issuer has been accused of hiding fees at one time or another so this is nothing new. What is new is the game being played by card issuers with very low credit limits for starters. These are offered with no sign-up fees with the promise of expanded credit after the card holder makes a series of monthly payments. The surprise comes with the first statement showing application, processing, or monthly processing fees. These fees can immediately use up most of the available credit on the card. Be sure to read the small print and ask about these kinds of fees before signing up.
* Cards with an unusually high credit limit – Many companies will offer the high limits but then only make good on them after ninety days, during which the holders’ spending and payment history are analyzed down to the last detail. Unsatisfactory results as seen by the issuer can lead to a much lower credit limit or cancellation of the card.
* Deceptive terms on balance transfers – Some companies will make offers to accept balance transfers in addition to issuing the new card. What the holders may not know is that the card doesn’t get issued until the balance is paid down significantly. During that time the consumer can be charged above market rates for what is essentially a debt repayment program.
* Advertisements using terms like “Rates as low as…” – At best, these are short term teaser rates but many card holders never see the rate at all because they don’t qualify for it.
All of these issues can be resolved in advance by doing a little homework and insisting on a print out of the details of any offer that is being put forward.
The other form of credit repair is based on the removal of negative information on credit reports. There are companies that work some of the loopholes of credit reporting and have success in getting negative information removed. Many credit repair companies, however, base their sales pitch on promises which are either illegal or undeliverable while asking for steep upfront payments. Here’s what to watch for when talking to a credit repair company:
* Accurate information cannot be deleted from a credit report. Any promises to do so should serve as a warning.
* Federal law prohibits up-front payments for credit repair. The law also requires credit repair companies to give you a detailed explanation of your legal rights, a comprehensive written contract, and three days to cancel if you’re working with a for-profit company.
* Creating a second credit profile under a new social security number or employer identification number is illegal and probably won’t work anyway. If it did work you would be committing wire and mail fraud every time you applied for credit using mail or the internet.
* Dismiss claims that a company can fix your credit and then hook you up with associates that can get you credit or a mortgage. The front company will not deliver and neither will their “associates”.
* Never take an offer off of an unsolicited email. Chances are, they’re spamming for business, which is illegal. A relation based on dubious beginnings is doomed to failure.
* Do not call 900 numbers for “free” information. The information may be free but the phone call isn’t. A caller can rack up a bunch of charges on a single call.
With stresses on jobs, credit cards, and paying the mortgage consumers are feeling more vulnerable than ever while looking for solutions. In a world of instant gratification, it’s easy to take the word of the first company you contact and hope you’re going to be ok. Don’t do it. Read the fine print, do your research, and ask lots of questions. It’s your money and your credit score; depleting both with no results is something no one can afford right now.     

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