America has always been known for its entrepreneurs and is can-do attitude. The downside is that some businesspeople are shady operators, selling products or services that are misleading, dishonest, or downright harmful. In the old days, there were snake-oil salesmen, supposed “doctors” who sold tonics that allegedly could cure just about anything, when in fact they were totally useless. That industry is well regulated today, but in its place we have other “snake-oil salesmen”: the credit-repair racket. Yes, there are some honest and legitimate agencies that help you rebuild good credit history, but there are many who are scoundrels. They’ll claim they can remove every negative item from your credit report, and that they’ll do it in a matter of days. As a consumer, what you need to do is look past what they’re claiming and see what’s actually possible and legal. You should also know this up front: Whatever they can do, you can do for yourself. People with fair credit and bad credit are often approached by agencies pledging to spiff up their credit reports so they can get good credit card offers once again. But the fact is, though these agencies will gladly charge you hundreds of dollars in service fees, they ultimately do little or nothing to make your credit score any better. This is simply because the Fair Credit Reporting Act determines what can be included in your credit report, and there’s very, very little that you or anyone else can do to get something taken off if it’s correct and up-to-date, no matter how negative it is. Yet in spite of this, a lot of credit-repair firms keep on promising they can do the impossible and take negative details off your credit report. What they do is, they file disputes against every negative piece of info, including the perfectly accurate, fair, and legitimate ones. While the credit bureaus are investigating (which they’re obligated to do), they have to remove the disputed items from your report — so yes, for a month or so, your credit report is spotless! And then the investigations are finished, the negative information is determined to be accurate, and you’re back where you started. Of course by then, you’ll have a hard time getting a hold of the shady operator who got you into this mess. So what CAN you do when you have past indiscretions dragging down your credit score? Well, if it’s correct and current, nothing. All you can do is wait for enough time to pass for it to be removed automatically. Generally, that’s seven years, although bankruptcies can stay for as long as 10 years.
However, if there’s something on your credit report that you believe is inaccurate, you have every right to demand that the credit bureau look into it. After you’ve filed the dispute, the credit bureau has 30 days to look into it. If they find you were right, and the thing is wrong, they have to remove it and inform the other credit bureaus so they can remove it from their files, too. It might sound scary, but it’s really a fairly simple process for you, the customer. There’s no fee for filing a dispute, and all you have to do is ask the credit bureau for a dispute form to fill out. So why would you pay someone to do all this for you?
Another scam that credit agencies sometimes pull is to tell you that you can get away from bad credit by making a wholly new credit file for yourself, basically starting from scratch. They tell you to apply to the IRS for an “Employer Identification Number,” which is nine digits, like a Social Security number. You start using that instead of your SS number when you apply for credit, and because the new number doesn’t have anything negative in its past — it doesn’t have a past at all — you’re in the clear.
Yeah, nice try, but no. For one thing, it’s against the law to get an EIN for misleading reasons like this one. Besides, having no credit at all is almost as bad as having bad credit, so using a brand-new EIN probably wouldn’t help you get new credit anyway.
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