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Let's be crystal clear, right up front.
Paying someone to "fix" your credit is a waste
of your time and money, since the negative
issues that are temporarily removed from your
file will only reappear again in a couple of
months.
Be careful with credit repair scams.
Most "credit repair" companies really don't
help. In fact, you can improve your credit more
effectively on your own. By using credit repair
companies, you may also be opening yourself up
to identity theft, unsolicited emails, and
direct mailings. Protect yourself; don't ever
share your personal information with strangers
or give up your right to handle your own
financial affairs as you see fit.
Another important point: credit counselors
only promise to get you out of debt, not to
improve your credit. Some companies will have
you send them a check every month, out of which
they're supposed to pay your creditors for you.
However, some credit counselors will often pay
your bills late, which means that your credit
report soon becomes filled with "over 30 days
late" notations and your credit score drops even
lower than it was.
"Debt negotiators," posing as non-profit
organizations, can ruin your credit even
further, advising you not to pay your credit
card bills at all. They also charge upfront
fees, maintenance fees, and monthly fees, all of
which are supposed to be placed in a "trust"
account. Then, after many months have passed,
debt negotiators finally convince creditors to
settle for less money than was owed, making
yours an "uncollectible account."
That tactic not only ruins your credit, due
to the many "over 90 days late" remarks and
collections notations, but all the money you
supposedly saved -- which was actually money you
owed -- will be considered as income by the IRS!
In other words, if you owed $20,000 and settled
for $12,000, you'd be required to list the
$8,000 difference as income!
Credit repair companies promise to help clear
up your credit problems. They write letters to
credit bureaus, stating that various listed
information is false, so the agencies will
remove that information while they investigate
your account. During that time, the credit
repair company sends you a clean credit report,
thereby giving you the false impression that you
now have good credit. But after you've paid off
the credit repair company, you'll discover that
all the negative items will soon reappear on
your report.
Remember: only incorrect items must be
removed from your credit report if they're
proven to be false. If the black marks on your
credit report are correct, no one can have them
removed, regardless of what credit repair
companies may try to tell you. Working with
collectors to remove negative remarks is
possible, but that's another article.
Some credit repair agencies can probably do a
reputable job removing items that are truly
incorrect, such as: items after a bankruptcy
that should have been removed, double items,
children's items on parents' reports, and
paid-off items that still show past due. Some
people really just don't like dealing with this
kind of thing, so a reputable credit restoration
company can help with these problems.
If you're seeking legitimate financial help
to buy a home, the best place to turn is to a
mortgage broker. They're the ones who can offer
you the best FREE advice for settling credit
disputes and problems, so when you find yourself
in difficulty, consider using a mortgage broker
as your credit counselor.
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