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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

Maryland Attorney General's Consumer Protection Division
Consumer hotline: (410) 528-8662 or 1 (888) 743-0023 toll-free

 
 

Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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