Self Help Credit Repair - Avoid These Common Pitfalls

What is self-help credit repair?
Self-help credit repair is the process of repairing your credit on your own without hiring an outside agency to help you. In many cases, "credit repair" or "debt repair" companies have only their own interests in mind, and charge you exorbitant amounts to do things that you can do to repair your credit yourself. No part of the credit repair process involves fees to the consumer, so the only thing you're paying a credit repair agency for is their time. Further, by letting someone else 'repair your credit,' you have no way of knowing what they're doing to your credit report, or whether their actions are legal.

With the easy availability of credit repair information today, self help credit repair is the best way to go, but look out for these common pitfalls:

Don't get your credit report red-flagged.
Some self-help credit repair websites tell you to dispute everything on your credit report. Avoid this temptation. Credit bureaus have a right to disregard your dispute if they consider it frivolous, so disputing all the negative items on your report, regardless of whether they're valid, is just a good way to get your credit report red-flagged. Some credit bureaus actually deny you the ability to dispute items on your credit report for up to 12 months if they find that you're filing tons of frivolous disputes. Don't loose your ability to correct negative information on your report. Dispute inaccurate or incomplete data, but don't file frivolous disputes.

Avoid using form letters for disputes.
You may have heard that the best way to file a dispute is via certified mail with return receipt requested, and this is true. Filing a dispute in this way gives you a paper trail, and a way to track down your documentation if you need to follow up with the credit bureau. However, if you use the exact same form letter for several disputes, credit bureaus are less likely to take your dispute seriously. Avoid using form letters you find on websites to file your dispute. Form letters can provide a great format and appropriate language for your dispute, but don't copy it all word-for-word. Change the language as needed for your particular dispute, rearrange it or otherwise make it unique.

Beware of credit repair loans.
Some companies are now advertising 'credit repair loans' to help you get back on your feet. These companies GUARANTEE that you'll receive a loan if you pay a high fee up-front. Avoid these companies. They're a scam. No lender guarantees a loan 'no matter what.' This category falls into the realm of things that sound too good to be true - credit repair loans don't exist. You may be able to get a personal loan to pay off debts, or get a debt consolidation loan from an existing lender, but these loans will come at a higher interest rate if you have bad credit. Avoid credit repair loans, because they simply aren't real. You'll just loose your down payment or deposit, and your credit may end up worse than ever.

Look out for unscrupulous debt-repair companies.
Unscrupulous debt-repair companies can actually cause your credit report to decline, rather than to improve. These companies take your money and don't do much for your credit report, or do things that actually negatively impact your credit report. Some lenders look upon credit repair services as badly as bankruptcy, and may file negative entries on your credit report if your credit repair agency isn't making the minimum payments or negotiating a true payment plan with the creditor. Look out for debt-repair companies that require you to pay up front for services, or won't tell you your legal rights or what they're doing with your credit report.

"Creating a new identity" is fraud.
Some credit repair agencies offer to create a new identity free from bad credit history using an EIN, or employer identification number. Falsely using an EIN is fraud. Committing fraud against a government agency is a very bad idea. Even if you're a victim of identity theft, creating a new identity with a new social security number is rarely done. If you have any questions about the use of a social security number or establishing a new one, contact the U.S. Social Security Administration. They can quickly answer any questions you might have about the legal use of social security information, and they should be your only point of contact if you truly need to obtain a new social security number. Using a third party for this purpose is extremely dangerous and can expose you to criminal charges, even if you're unaware that they're taking illegal actions.

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