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Consumer
Publications List
Credit Repair Scams
" If You Could Buy 'Good Credit' for $179 You Would, Wouldn't
You?"
This
headline prompted several consumers to file complaints with the Consumer
Protection Division. The words appeared on a flyer enticing
consumers to pay for credit help. Many similar advertisements continue
to lure consumers with promises of clean credit ratings. But in fact,
you can't buy good credit.
In a time when more and more people are struggling
to keep their heads above water, credit repair scams flourish. But
if you have bad credit,
only time, patience and timely repayment of debts will earn you
a clean slate.
Offers to Repair Your Credit Record
You might find a flyer under your windshield wiper
or see an ad in a newspaper or on television or the Internet offering
to clean
up your
credit problems. If your credit history stops you from getting
loans or credit cards, this may seem like a blessing - but beware.
Even if
credit repair organizations were able to legitimately help you
improve your credit rating, state and federal law prohibit these
companies
from
charging any fees in advance of providing services, so steer
clear of any credit repair business that asks for payment upfront.
If you have been unable to repay loans or pay bills
on time, this is reflected in your credit history. Lenders and credit
card issuers
check
your credit history before approving new credit, so it's likely
you'll have difficulty obtaining financing until your credit
record is mended.
You have to re-establish good credit by paying off
your current debt and then showing, over a period of years, that you are
able
to pay
your bills on time. The amount of time it takes to re-establish
good credit
varies from three to 10 years, depending on how bad your situation
is. If you must declare bankruptcy, for example, re-establishing
credit will
probably take seven to 10 years.
It's a good idea to check the accuracy of your credit
report periodically. You can obtain a free copy of your credit report
through www.annualcreditreport.com or
by calling 1-877-322-8228. The Federal Fair Credit Reporting
Act allows consumers to receive a free copy of their credit reports
once
a year
from each of the three Credit Reporting Agencies. In addition,
Maryland law gives its residents the right to a free annual copy
of their credit
report. This means you can review your credit report
six times a year for free (two free reports from each agency).
For more information about your credit report and to order your
free credit
report under
State law,
consumers may individually contact the three major credit reporting
bureaus at the following numbers: Equifax, 800-685-1111 or www.equifax.com;
Experian,
888-397-3742 or www.experian.com;
Trans-Union, 800-888-4213 or
www.transunion.com.
If your poor credit rating is a mistake - if someone
has erroneously reported that you failed to pay a bill or repay a loan
- you
can have your record repaired at no cost. The credit bureau will
tell
you how.
Bogus Credit Card Offers
A Baltimore consumer received a phone call one evening
saying she had been approved for a Visa or Master Card. All she had
to do
was make
two calls to a 900-number and the credit card of her choice
would be mailed
to her. She called the number as instructed but never received
a credit card. She did receive a bill from the phone company
for $50 for the
two calls.
The offer goes like this: You pay a fee and the company
will provide you with a bank credit card - Visa or Master Card.
Sometimes you
must call a 900-number, for which you will be charged $25 to
$50. Sometimes
you are told to send a money order.
However, after you send the money or call the 900-number,
you may well receive nothing. Or, you may receive a list of banks
that
offer credit
cards - information that does you no good and is available
at no cost. Beware of these scams. If no bank will approve
you for
a
credit card,
this company is not likely to do so either.
What some companies provide is a 'credit card' good
only on their own merchandise. They tell you if you buy from them using
their
credit
card and pay the bills promptly, you will establish credit.
But the merchandise
is usually overpriced and using this card does little to help
you establish credit.
Generally, your best bet is to steer clear of companies
or individuals offering to help manage your debt for a fee.
Credit Help is Available
If you are having difficulty getting credit, have a
bad credit rating or are deeply in debt, a number of agencies may be
able to help.
If you've been the victim of a scam or you're having
problems with a debt collection agency, the Office of the Commissioner
of Financial
Regulation can review your
problem and explain your credit rights. You can reach that agency
by calling 410- 230-6100 or visiting the website at www.dllr.state.md.us/finance.
Don't wait until your creditors start calling to get
help. If you realize you can't pay your monthly bills, contact
your creditors immediately
and arrange
a special payment plan that allows you to make smaller payments or
skip a monthly payment. If your creditors accept new payment
terms, be sure
to get that agreement
in writing.
If it looks like your financial difficulties will last
a long time, consider seeking some help from one of the following:
- The
Maryland branch of Consumer Credit Counseling Service, a nationwide,
non-profit
agency, will try to help you iron out your debt problems. You
can reach CCCS by calling 1-800-642-2227 or go to CCCS’ website
at www.cccs-inc.org/.
- The
University of Maryland's Cooperative Extension Service offers free
credit counseling and education through
its Financial Counseling
Service. For help,
contact the Extension Office in your county. You can find
a list of Extension Offices by going to http://extension.umd.edu/local/.
In many cases, people or businesses that offer to help
repair credit histories or arrange additional credit must be licensed
and bonded in Maryland. To
verify that a company is licensed in Maryland, call the
Commissioner of Financial
Regulation.
February
2010
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