Kay Robinson: BBB Report

By the end of 2007, Americans owed more than $915 billion in credit card debt, and the credit crunch is clearly impacting consumers as lenders are becoming more choosey about who gets loans and who doesn't.

Given stricter loan and credit requirements, the Better Business Bureau is warning that some companies are using the credit crunch to take advantage of consumers by promising bogus credit repair services that can be costly and in some cases illegal.

Complaints about credit repair companies have risen for three straight years, topping more than 1,400 in 2006 - a 38 percent increase since 2004. More than 400 of those complaints were not resolved, meaning the BBB was not able to track down the company or the company refused to take steps to resolve the issue with the consumer.

Offers for miraculous credit repair are common in radio, television, newspaper and direct mail advertising. The Internet is home to countless credit repair sharks, some requiring consumers pay large fees upfront - upward of $1,500 - and in return may promise to erase any blemishes on credit records, get new Social Security numbers for clients or allow consumers to piggyback on someone else's credit record.

The BBB counsels consumers that no one can legally remove accurate and timely negative information from a credit report, that it's nearly impossible to get a new Social Security number and that piggybacking on someone else's credit can be construed as loan fraud.

Consumer Reports notes that Americans find nearly 13 million inaccuracies on their credit reports each year. With millions of inaccuracies in credit reports, the BBB encourages all consumers to check their reports. Everyone is entitled to a free copy of the report from all three credit reporting bureaus every year or if the person has been denied credit within the last 30 days.

The law does allow an individual to request reinvestigation of information that the person feels is inaccurate or incomplete, and there is no charge for this process. The BBB reminds people that everything a credit repair company can do for them legally, people can do for themselves at little or no cost.

If consumers seek or respond to a credit repair offer, they need to be aware that, by law, credit repair organizations must provide a copy of the "Consumer Credit File Rights Under State and Federal Law."

This one-page document outlines the consumer's rights in disputing inaccurate information on a credit report, and also addresses consumers' rights in dealing with credit repair companies. A key point is that consumers have the right to cancel a contract with any credit repair organization for any reason within three business days from the date the contract was signed by the consumer.

Companies must also provide a written contract that spells out the consumer's rights and obligations. The BBB advises anyone using a credit repair service to read these documents carefully before signing anything. It also suggests consumers beware of companies that:

Before contacting a credit repair service, consumers can check them out first with the BBB by easily accessing BBB Reliability Reports free at www.bbb.org.

For consumers with serious credit problems, Consumer Credit Counseling Services is available for a low fee or, in some cases, free. Some of the services provided may include working out a payment plan with lenders, as well as guidance and advice to help consumers make more financially sound decisions in the future. To find the nearest CCCS office, call toll-free, 800-388-2227, or go to: www.nfcc.org.

Kay Robinson
()