Learning how to recognize credit repair scams will save you pain and money. The scammers promise to remove negative information from your credit report, so that you can be approved for future credit. They can't deliver on those promises, and the fee you pay to them is lost. The good news is that these scams follow the same patterns, so once you understand how they work, you can avoid them. Here's how they work:
Pay Us First
Credit repair scams work by getting consumers to pay the scam artists money up front, so that they can disappear with it or provide incomplete or inadequate services. You shouldn't pay anyone a fee to repair your credit report, which you can do on your own, and certainly not before they've provided the services they promised. You should also be aware that the Credit Repair Organizations Act makes it illegal for companies to charge upfront fees prior to repairing credit. There are also related state laws that prohibit this practice.
We'll Contact the Credit Reporting Agencies
The pitch made by companies behind credit repair scams is that they'll handle everything, and that there's no need for you to contact the credit reporting agencies on your own. Red flags should go off in your head when any company wants to block you from dealing directly with anyone. If the company you're dealing with tells you this, then you’re probably in the middle of a scam.
Start a New Credit History
Some companies suggest that they can help you start a new credit history altogether by using alternative identification numbers. For example, a company may advice you to obtain an employer identification number (EIN) and to obtain credit using it, instead of using your social security number. That's opening the door to fraud and the company will be long gone with your money when you end up in legal hot water.
We Can Get Rid of Accurate Information
Any information that's accurate on your credit report cannot be removed by you or a "credit repair company." However, this remains to be one of the top credit repair scams going. The company offers to use insider knowledge to remove the record that's accurate, but you have to pay them for their expertise and service. What they don't tell you is that the credit reporting agency cannot and will not do it. To do so for consumers would be to destroy the entire credit reporting system and those agencies aren't going to risk that.
Get a Credit Card from Us
Some consumers feel the need to obtain new credit in order to rebuild their credit. There are credit repair scams to meet that need, and one example consists of the company offering a pre-approved credit card to the prospective victim. All you have to do is call one or more 900-numbers to get your cards. What often happens is that you're charged for the call, and you either get a bogus list of companies offering credit cards or you don't get anything.
Avoiding credit repair scams is difficult if you're feeling hopeless about your debt situation. There are legitimate ways to eliminate debt and get back on the path of good finances for free. Research those strategies first, before seeking help from others.
Wednesday, June 29, 2011
Sample Credit Dispute Letter
A credit dispute letter is a tool that you can use to get inaccurate information removed from your credit report. You can ask each of the consumer reporting agencies to delete the record or to modify it in some other way. The departments in charge of handling disputes will conduct an investigation, and either grant or deny your request. Here’s what you need to know about writing a credit dispute letter:
Sample Credit Dispute Letter
The three major components of any letter you write are:
* Your statement that the record in dispute is incomplete or inaccurate
* Explanation of the reasons why the record is not complete or correct
* A specific action request, such as to delete or change the information
The Federal Trade Commission offers a full sample credit dispute letter when contesting errors on your credit report at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm. Here’s an excerpt from the letter which incorporates the three major components:
"This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information."
Things to Accompany the Letter
Investigators at the reporting agencies will pay particular attention to the reasons you've stated for why the record should be modified. It's important to provide as detailed an explanation as possible. You'll also need to include documentation to support your claims. You have many options for documentation support, including:
* Copy of your credit report with the record highlighted or encircled
* Court documents
* Records of payments
* Letters from creditors confirming the full payment of debt
It's often not enough to make your requests without some documentation if you want investigators to take the actions you've requested. Make sure that your documentation relates to the explanations you've given in your letter. If what you provide has nothing to do with your statement that the record is incomplete or not correct, then the credit dispute letter won’t be effective. To obtain a free credit report, visit www.annualcreditreport.com.
Where to Send the Letter
You should address your credit dispute letter to the complaint department at each of the consumer reporting agencies. The addresses are as follows:
TransUnion
Complaint Department
P.O. Box 6790
Fullerton, CA 92634
Experian
Complaint Department
P.O. Box 9532
Allen, TX 75013
Equifax
Complaint Department
P.O. Box 740241
Atlanta, GA 30374-0241
Your letter will be forwarded to investigators who will notify you that they are in receipt of your letter, and at a later date will explain the outcome of your request.
Take immediate action by sending a credit dispute letter when you discover a discrepancy on your credit report. You can order a free credit report annually or pay for a service that sends alert based on new records that appear on your credit report.
Sample Credit Dispute Letter
The three major components of any letter you write are:
* Your statement that the record in dispute is incomplete or inaccurate
* Explanation of the reasons why the record is not complete or correct
* A specific action request, such as to delete or change the information
The Federal Trade Commission offers a full sample credit dispute letter when contesting errors on your credit report at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm. Here’s an excerpt from the letter which incorporates the three major components:
"This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information."
Things to Accompany the Letter
Investigators at the reporting agencies will pay particular attention to the reasons you've stated for why the record should be modified. It's important to provide as detailed an explanation as possible. You'll also need to include documentation to support your claims. You have many options for documentation support, including:
* Copy of your credit report with the record highlighted or encircled
* Court documents
* Records of payments
* Letters from creditors confirming the full payment of debt
It's often not enough to make your requests without some documentation if you want investigators to take the actions you've requested. Make sure that your documentation relates to the explanations you've given in your letter. If what you provide has nothing to do with your statement that the record is incomplete or not correct, then the credit dispute letter won’t be effective. To obtain a free credit report, visit www.annualcreditreport.com.
Where to Send the Letter
You should address your credit dispute letter to the complaint department at each of the consumer reporting agencies. The addresses are as follows:
TransUnion
Complaint Department
P.O. Box 6790
Fullerton, CA 92634
Experian
Complaint Department
P.O. Box 9532
Allen, TX 75013
Equifax
Complaint Department
P.O. Box 740241
Atlanta, GA 30374-0241
Your letter will be forwarded to investigators who will notify you that they are in receipt of your letter, and at a later date will explain the outcome of your request.
Take immediate action by sending a credit dispute letter when you discover a discrepancy on your credit report. You can order a free credit report annually or pay for a service that sends alert based on new records that appear on your credit report.
What to Do if You're a Victim of Identity Theft
If you find yourself a victim of identity theft, you can take some steps to minimize the damage and protect yourself against future theft in the process. It's important to react as soon as you discover that a theft has taken place, so that thieves don't have more time than necessary to completely destroy your finances or cause you a lot of problems. Here's what you should do:
Investigate All Wrong Doing
You have to know the extent of the theft in order to take the appropriate actions. To begin with, you should obtain copies of your credit report to see what unauthorized accounts have been opened. You should also check your bank accounts, credit accounts and all other accounts to search for fraud activities. Once you have an idea of what's happening, you'll know what steps to take.
File a Police Report
A police report is probably not going to cause the police to pursue the matter, because other types of crimes are often given a higher priority. However, it is helpful to have one as you work to undo the fraud and theft. For example, your bank may readily refund any money stolen if you submit a copy of the police report that documents the crime. It's also part of your legal documentation should you decide to pursue the matter in court.
Notify Credit Bureaus
Write a letter to all three credit bureaus stating that you are a victim of identity theft. Explain the circumstances, and relay any information you have about fraudulent accounts opened in your name. Each agency, TransUnion, Equifax and Experian have fraud departments to handle identity theft cases. You'll probably get a fraud alert on your file to make it difficult for future accounts to be opened without your authorization.
Contact Financial Institutions
You also need to send letters to every financial institution where you have an account, and where there's evidence of fraudulent activity. They may also have a fraud department as well to help each victim of identity theft. It's also a good idea to place a call to those institutions where you haven't noticed any tampering, just in case it's next in line. You can ask them to place a hold on the account and not to authorize any transactions until you give them further notice.
Close Fraudulent and Tampered Accounts
As soon as you discover accounts that have been opened in your name by an identity thief or tampered with, your best option is to close those accounts. Go the banks and other financial institutions in person if you can, but if not, close the accounts in writing. You don't know who has your information and how many times it may have been sold. Even if you ask for holds to be placed on the accounts, you may end up with problems in the future once you lift hose holds. Follow up by filling out the forms necessary to dispute purchases or transactions that you did not authorize.
You don't have to remain a victim of identity theft. Take these action steps to minimize the damage done and reclaim your life.
Investigate All Wrong Doing
You have to know the extent of the theft in order to take the appropriate actions. To begin with, you should obtain copies of your credit report to see what unauthorized accounts have been opened. You should also check your bank accounts, credit accounts and all other accounts to search for fraud activities. Once you have an idea of what's happening, you'll know what steps to take.
File a Police Report
A police report is probably not going to cause the police to pursue the matter, because other types of crimes are often given a higher priority. However, it is helpful to have one as you work to undo the fraud and theft. For example, your bank may readily refund any money stolen if you submit a copy of the police report that documents the crime. It's also part of your legal documentation should you decide to pursue the matter in court.
Notify Credit Bureaus
Write a letter to all three credit bureaus stating that you are a victim of identity theft. Explain the circumstances, and relay any information you have about fraudulent accounts opened in your name. Each agency, TransUnion, Equifax and Experian have fraud departments to handle identity theft cases. You'll probably get a fraud alert on your file to make it difficult for future accounts to be opened without your authorization.
Contact Financial Institutions
You also need to send letters to every financial institution where you have an account, and where there's evidence of fraudulent activity. They may also have a fraud department as well to help each victim of identity theft. It's also a good idea to place a call to those institutions where you haven't noticed any tampering, just in case it's next in line. You can ask them to place a hold on the account and not to authorize any transactions until you give them further notice.
Close Fraudulent and Tampered Accounts
As soon as you discover accounts that have been opened in your name by an identity thief or tampered with, your best option is to close those accounts. Go the banks and other financial institutions in person if you can, but if not, close the accounts in writing. You don't know who has your information and how many times it may have been sold. Even if you ask for holds to be placed on the accounts, you may end up with problems in the future once you lift hose holds. Follow up by filling out the forms necessary to dispute purchases or transactions that you did not authorize.
You don't have to remain a victim of identity theft. Take these action steps to minimize the damage done and reclaim your life.
Credit Repair Scams: What to Do if You're a Victim
Credit repair scams abound as more and more people who have taken on debt are desperate to find a way out. The scam is the same over and over again. These "companies" promise to erase your credit and help you start fresh, and all you have to do is pay them a fee. What ends up happening is that you're in a worse position than before once you start dealing with these scam artists, and you're out the money you pay them. Here's what to do if you've been the victim of credit repair scams.
Contact State Consumers Affairs
There are state laws to protect consumers against credit repair scams. Start by contacting your state's consumers affairs office about what happened. The office would be helpful in explaining your credit rights, as well as investigate your complaints against the individuals and companies involved. The agency might also refer you to the state attorney general.
Report Scam to the Attorney General
You don't have to go through the state consumers affairs office to report the scam to the attorney general. The office of the attorney general in your state also gets complaints of credit repair scams and is charged with enforcing the laws against those who are perpetrating those crimes. You can contact the office directly and request that they investigate and pursue the matter for you. It's within the discretion of the attorney general which individual cases to pursue, but if your case is chosen, you'll have a chance of recovering any money you paid as a result of the scam.
Avoid companies in the future that want you to pay them to manage your debt. These are most likely credit repair scams that will set you back, rather than help you become debt free.
Contact State Consumers Affairs
There are state laws to protect consumers against credit repair scams. Start by contacting your state's consumers affairs office about what happened. The office would be helpful in explaining your credit rights, as well as investigate your complaints against the individuals and companies involved. The agency might also refer you to the state attorney general.
Report Scam to the Attorney General
You don't have to go through the state consumers affairs office to report the scam to the attorney general. The office of the attorney general in your state also gets complaints of credit repair scams and is charged with enforcing the laws against those who are perpetrating those crimes. You can contact the office directly and request that they investigate and pursue the matter for you. It's within the discretion of the attorney general which individual cases to pursue, but if your case is chosen, you'll have a chance of recovering any money you paid as a result of the scam.
Avoid companies in the future that want you to pay them to manage your debt. These are most likely credit repair scams that will set you back, rather than help you become debt free.
How to Improve Your Business Credit Score
Your business credit score is built the same way as your personal score. Your business is assigned a number, called a taxpayer identification number, and any lender doing business with you will ask for this number. Then, the lender will report how successful you were at repaying your debt to the major credit agencies, and the agencies will file the reports under your number. If you want to increase your score, try these tips to associate positive debt arrangements with your tax payer ID.
File Loans in your Business Name
The first and most important step to increase your credit as a business is to make sure all of your debts are in your business name. When you first open your doors, you may take loans in your personal name or in the name of one of the owners. This is often necessary since your business has no credit of its own. However, as the business grows, it will develop a legal identity and a financial profile. This can be used to secure debts independent of your name, and you should begin making these arrangements as soon as possible. If you have a business loan secured with your personal information, replace this with a business loan secured in the business's name as soon as possible.
Grow your Business Capital
Credit is determined using a complex algorithm, and a key part of this algorithm is how much worth your business has compared to its debt. By building up your assets and capital, you can increase your business's credit score. If you do not have a large initial asset base, consider taking on investors. Unlike loans, funds from investors do not count as debt, and they will only add to your asset base without increasing your debt load.
Open a Business Credit Card
A factor in the way your credit is calculated is a comparison to the potential credit available to you versus how much of that credit is currently in use. By increasing the amount of credit in your business's name, you can boost your credit score. Open a business credit card, and use the card wisely. As long as the balance remains low, this will help your score. Do not open too many credit cards, however, as this can also drop your score. Instead, you should have a healthy credit-to-debt ratio without having too much available credit.
Pay Debts on Time
The most basic advice about credit is also the best: build your credit by paying your debts on time. When you pay off your credit card each month, you receive a little boost in your score. These two or three points each month can add up to huge increases in your credit score. You will see the largest increases when you pay off big loans, such as your start-up loan. To keep these boosts coming, finance business materials or machinery and pay off the debts on time. If you continue this record, your business will have a very high rating in just a few years.
File Loans in your Business Name
The first and most important step to increase your credit as a business is to make sure all of your debts are in your business name. When you first open your doors, you may take loans in your personal name or in the name of one of the owners. This is often necessary since your business has no credit of its own. However, as the business grows, it will develop a legal identity and a financial profile. This can be used to secure debts independent of your name, and you should begin making these arrangements as soon as possible. If you have a business loan secured with your personal information, replace this with a business loan secured in the business's name as soon as possible.
Grow your Business Capital
Credit is determined using a complex algorithm, and a key part of this algorithm is how much worth your business has compared to its debt. By building up your assets and capital, you can increase your business's credit score. If you do not have a large initial asset base, consider taking on investors. Unlike loans, funds from investors do not count as debt, and they will only add to your asset base without increasing your debt load.
Open a Business Credit Card
A factor in the way your credit is calculated is a comparison to the potential credit available to you versus how much of that credit is currently in use. By increasing the amount of credit in your business's name, you can boost your credit score. Open a business credit card, and use the card wisely. As long as the balance remains low, this will help your score. Do not open too many credit cards, however, as this can also drop your score. Instead, you should have a healthy credit-to-debt ratio without having too much available credit.
Pay Debts on Time
The most basic advice about credit is also the best: build your credit by paying your debts on time. When you pay off your credit card each month, you receive a little boost in your score. These two or three points each month can add up to huge increases in your credit score. You will see the largest increases when you pay off big loans, such as your start-up loan. To keep these boosts coming, finance business materials or machinery and pay off the debts on time. If you continue this record, your business will have a very high rating in just a few years.
How Business Credit Scores Are Determined
When you first open your business, your business credit score may be nonexistent. This may require you to open loans with your personal name. However, aside from these initial loans, your personal credit will have nothing to do with your business's credit. In fact, business scores are calculated with different factors.
Balance Sheets
The primary factor used to determine a business's financial health is its balance sheet. Reviewing your financial report that lists your assets, debts and liabilities will be a top priority of any lender considering you for a loan. Building up your balance sheet takes more than just paying off debts on time. You must show you have an asset base large enough to continue to fuel your operations in the future. You must also show you have turned past debts into income at a high rate in order to remain financially appealing to lenders.
Income and Debt Ratios
Your business's income and debt ratios play large roles in your credit score. A lender will first view your balance sheet, comparing your assets to your liabilities. Then, a lender will view your accounts receivable, attempting to learn your anticipated profits over a certain period. Even a business with a low asset base can be a good borrower if the business has high income but relatively few debts to its name. For example, a web design company has few assets other than a personal computer. However, if the company is owned and operated by one person with no debts, this low asset base may not matter. As long as the individual's income is high enough to repay debt costs, a lender will understand the operation is very lean yet deserving of a loan.
Balance Sheets
The primary factor used to determine a business's financial health is its balance sheet. Reviewing your financial report that lists your assets, debts and liabilities will be a top priority of any lender considering you for a loan. Building up your balance sheet takes more than just paying off debts on time. You must show you have an asset base large enough to continue to fuel your operations in the future. You must also show you have turned past debts into income at a high rate in order to remain financially appealing to lenders.
Income and Debt Ratios
Your business's income and debt ratios play large roles in your credit score. A lender will first view your balance sheet, comparing your assets to your liabilities. Then, a lender will view your accounts receivable, attempting to learn your anticipated profits over a certain period. Even a business with a low asset base can be a good borrower if the business has high income but relatively few debts to its name. For example, a web design company has few assets other than a personal computer. However, if the company is owned and operated by one person with no debts, this low asset base may not matter. As long as the individual's income is high enough to repay debt costs, a lender will understand the operation is very lean yet deserving of a loan.
Credit score
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus.
Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Credit scoring also has a lot of overlap with data mining, which uses many similar techniques.
FICO is a publicly-traded corporation (under the ticker symbol FICO) that created the best-known and most widely used credit score model in the United States.
Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Credit scoring also has a lot of overlap with data mining, which uses many similar techniques.
FICO is a publicly-traded corporation (under the ticker symbol FICO) that created the best-known and most widely used credit score model in the United States.
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