Beware 'Credit Repair' Scams

Here's what to look out for when you're checking firms online

By ILYCE GUNK Tribune Media Services

Every day, thousands of people type the words "credit repair" into Internet search engines. Thousands more type in phrases like "bad credit" or "bad credit repair."

Figuring out how to repair credit is on the minds of home buyers, sellers and owners who've realized that having stellar credit provides financial options that simply aren't available to those with low scores.

Unfortunately, some of the Web sites that come up in a search for "credit repair" can do more harm than good. They're scams.
The typical credit repair scam works in one of a couple of different ways.

There is the promise that your credit history will be wiped clean. And you'll be asked for a large payment upfront, sometimes as much as $1,000 to $1,500.

In one typical scam, the credit repair organization will tell you that you'll get a new Social Security number. Since the Social Security number is new, it won't have any blemishes on it and your credit will be perfect.

Unfortunately, the Social Security Administration (SSA) almost never gives out new Social Security numbers - even to people who have legitimately had their number stolen and used over and over again.

Another common scam is to dispute all of the negative information on your credit history.

A credit reporting bureau must investigate all disputes within 30 days. If the bureau can confirm the negative information, it stays on your report. If it can't confirm it, the information is pulled off your credit history.

But here's the key: While the information is being disputed, it temporarily disappears from your credit history. So, your credit history looks perfect, even though it isn't. At the end of the 30 days, the credit repair company will dispute all of the charges again.