Senate News Update
From Senator Jane Earll
July 6, 2009

Protect Yourself from Credit Repair Scams

These are extremely difficult economic times. Retirement savings have been hard hit and pension plans may have lost much of their value.

While the incomes of many households decline, the bills continue to arrive on schedule.  That can lead to an overreliance on credit, damage to your credit rating and, ultimately, create an opening for "credit repair" scammers.

These and similar enterprises are regulated by the state Department of Banking, which notes that many companies claim they can "erase" or "repair" your credit history -- for a fee.  But the truth is that only time and paying down your debts can improve your credit rating.

Dishonest credit repair companies may charge hundreds, even thousands of dollars for services they never perform.  Others bill customers for things they can do on their own for free such as disputing errors and removing outdated items.

In one common credit repair scam, the company disputes all the negative information in an individual's credit reports.  This usually results in some of the information being removed temporarily by the credit bureaus while the disputes are reviewed.  During this time, the individual's credit appears to have improved.  However, this is neither a legitimate or permanent fix.

Another trick is advising an individual to apply for a new Employee Identification Number (EIN) from the IRS and then use that number, which has the same number of digits as a social security number, to apply for credit.  As the Department of Banking points out, this is known as "file segregation" and it is a felony.

Here are a few facts to keep in mind avoid a credit repair scam:

• No one can erase negative information from your credit reports if it is accurate.
• You can correct mistakes on your credit report yourself.
• Credit repair companies cannot ask for payment before services are performed.
• You are entitled to a free copy of your credit report from each of the three credit bureaus once every 12 months.
• The National Foundation for Credit Counseling can help you find an accredited credit counselor near you.

You can find information on companies licensed or chartered by the Department of Banking at www.banking.state.pa.us and 1-800-PA-BANKS.   If you are a victim of fraud, contact the Federal Trade Commission and the Pennsylvania Office of Attorney General. 

For more information you can contact the National Foundation for Credit Counseling at www.nfcc.org and 1-800-388-2227.

The recession is difficult enough without having to fend off scam artists who exploit a bad situation and seek to prey on anxiety.  They can be crafty, but by keeping the above guidelines in mind, we can outsmart them.

CONTACT: Senator Earll's office, (814) 453-2515 or jearll@pasen.gov