Updated: May 3, 2013 12:14PM
Originally published: November 19, 2002
It’s bad enough to be buried in debt. It’s even worse when you try to get out of debt and find you’ve been scammed. Here’s what to watch out for, and some sources of legitimate help.
Sure signs you are being scammed:
* A company charges an upfront fee of more than $50 before it has produced results. The Credit Repair Organizations Act makes it illegal for companies to charge a fee until their services have been performed.
* A company offers to create a new identity using an EIN (employee identification number) or create a new credit file for you. That’s illegal.
* A counselor offers to improve your credit rating or remove information from your credit report. Only the original credit grantor can change information.
There are some absolutely legitimate credit help services, such as Consumer Credit Counseling Services (800-388-2227) and Cambridge Credit Counseling (800-897-2200) that can assist you in dealing with creditors, lowering finance charges and establishing consolidated repayment plans. Stick with these reputable services. If you think you’ve been scammed contact the Federal Trade Commission at (202) FTC-HELP.
How to check your credit
Start by getting a copy of your credit report. There are three major credit bureaus: TransUnion, Experian and Equifax. Each has a proprietary Web site: its name, followed by .com, where you can order a credit report for about $8. (You’re entitled to a free report if you’ve been turned down for credit recently.) And there are a variety of secure online services offered by the credit bureaus or their subsidiaries with special deals for getting credit reports.
* ConsumerInfo.com is owned by Experian and offers a wealth of information about your credit rights.
* FreeCreditReport.com, another Web site owned by Experian, gives one free credit report from Equifax or Experian as part of a $79.95 annual membership that allows unlimited checkups on your credit report, and even sends you an e-mail when new, negative information is placed on your report by a merchant. (Hint: You can cancel within 30 days and still receive your free credit report.)
* CreditExpert.com, a similar $79.95 annual service with access to a toll-free line to explain your credit report, and recruit the services of an advocate in helping you clear your report of mistakes. It’s also owned by Experian.
* Equifax.com, where you can order a combined 3-in-1 credit report comparing the information line-by-line on reports from each of the three major bureaus. Cost: $29.95. CreditMatters.com (an Experian Web site) offers a similar triple report, plus your Experian credit score, for $34.95.
* MyFico.com provides your Equifax credit report and your FICO score (the one used by the majority of mortgage lenders) for $12.95.
In order to acquire your credit report online, you’ll be asked for some “out-of-wallet” information--things that could not be known by a thief who stole your wallet. It may be the amount of your monthly mortgage payment or auto loan. All of the services listed here use secure technology and are owned or partnered with the major credit bureaus. Other Web sites may not be so secure.
How to change your credit report
Since credit bureaus compile the information they receive from merchants, only the credit-granting merchant can make changes, by sending new information directly to the credit bureau. So contact the merchant or lender if you have a dispute. And don’t resolve disputes with merchants by not paying your bill; it will wind up ruining your credit!
You’re entitled to post a short statement on your credit report, explaining any dispute. But legitimate information--good or bad--stays on your credit report for seven years. Late payments, judgments and chargeoffs all contribute to a report that can haunt you. Bankruptcy stays on your credit report for 10 years.
Ignoring your credit report--even if you’re not planning to apply for new credit--could be a costly mistake. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and is on the board of directors of McDonald’s Corp. and Pennzoil-Quaker State Co. Send questions via e-mail to email@example.com. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast.