Is Credit Repair a Scam?
No! It may be that the company or person offering a credit repair service
are not very good at it or are indeed themselves ‘fraudsters’
and have no intention of doing anything for you but, no matter what anyone tells you,
it is possible to ‘repair’ your credit file.
Can you repair your file yourself?
Yes you can! There are no steps a company or anyone else can legally take
to repair your credit file that you can't take yourself.
A reputable company however is likely to have the know-how to do the job better
than you can do it yourself though they will charge you for the time spent doing so.
The reality is that you can obtain a copy of your credit file yourself
for a statutory payment of only £2.00.
There are two principal credit reference agencies in the UK, Equifax and Experian
and they are legally obliged to supply you with a copy of any file
they hold on you on payment of the cost stated.
Where you approach a company to assist you,
they will simply obtain a copy of the same file.
Their charge will almost certainly be more but will probably provide
for some form of analysis of your credit file and some guidance on what can be done,
if anything, to improve your credit worthiness.
Will I be able to obtain credit afterwards?
Not necessarily! Do not be fooled into thinking that repairing your credit files
will automatically enable you to obtain credit cards and loans as it will not.
There are lots of things taken into account by credit card companies,
banks and loan companies in deciding whether to make an offer to you.
Your credit file is just one of those things and whilst very important
in the decision making process, it is not the only thing a lender relies upon.
Each lender has its own set of rules and these rules are not the same
and are not published. Sometimes you can be turned down for a loan or credit card
believing it is your credit history to blame when in reality,
it has nothing to do with the decision; it may simply be
that you do not fit a lender’s criteria in the first place.
Does Credit Repair Work?
The plain and simple truth is that sometimes it doesn't work;
in many cases it can't work because a persons history is simply too bad
and the credit reference agencies files are 100% accurate.
What the credit repairers can often do is improve the perception of you
as a risk by various means and this can include removal of county court judgements
from your credit file (though only in very exceptional cases)
and they can also remove defaults
(though only with the agreement of the creditor whose consent will be needed).
They can place explanations on file as to why a situation arose
to cause a particular problem and this of itself can improve your file.
They cannot offer guarantees that their programme will give you good credit.
If I am approached how can I identify a Credit Repair scam?
- Look at the source of the approach. If it came by e-mail, be very wary.
- What exactly are you being offered? If they say they'll be able to erase
your bad credit history, don't believe a word.
They cannot possibly tell you what they can achieve without first seeing your credit files
and even then will need to have some input from you
before they can reliably comment on precisely what they can do.
If you have bad credit, there are steps that can be taken,
but nothing will happen instantly.
- Do they ask for an upfront fee? They may well do
but it should be relatively small and sufficient only to cover their costs
in getting hold of and analysing your credit files.
Do not pay up front for any repair work promised;
wait until the full analysis is done
and you can get a greater assurance of the actual work
which can then be done to help you.
- If the repairer suggests supplying false information on a credit application,
do not listen. To do so would be a criminal offence
for which you can be prosecuted and possibly imprisoned.
- Are the repairers offering a loan? If so be careful.
Read the terms carefully and you will in all probability find the interest rates
are outrageous, and the repayment plan difficult to meet.
If you decide to Do it Yourself here are the steps
you need to take To Repair your Credit Rating yourself.
- Start by requesting a booklet called "No Credit?"
from the Office of the Data Protection Commissioner.
- Order a copy of your credit file.
There are two main credit reference agencies in the U.K – Equifax and Experian.
You can obtain a copy of your file for £2.
Do not be afraid to challenge entries you think are wrong.
You can make amendments to your file,
and have incorrect information erased.
Alternatively you can have a note added to your file stating
why you believe an entry is incorrect.
- If you've had a county court judgment against you
and you have settled that debt within a month,
it should be removed from the court records and credit files
although the history of the debt may not be deleted from your credit file.
- Where a Judgment is paid more than one month after it is imposed
it can be marked "satisfied" after you apply to the court
for a certificate of satisfaction. The court will then pass the information
to the credit reference agency. If you believe information of a judgment
is incorrect, the court can give you guidance on having it changed.
What if I decide not to do it myself?
- Be careful which firm you choose.
Look for someone who has been around for a number of years,
preferably a Company of long standing rather than an individual.
- Ask them if they are ‘regulated’.
This will not be as a credit repairer
as this is not a ‘regulated industrial sector’;
they may however be regulated in some other sector
which of itself may give you some confidence.
For example solicitors are regulated by the Law Society, accountants
by their own regulatory body,
Company Incorporation Agents being regulated
by HMRC and some firms by the FSA.
- Be very wary of anyone making cast iron
guarantees very early in the repair process.
- Ask them to provide evidence of any past successes claimed.
A reputable firm will not be short of good references
and will probably have arrangements with some former clients
to use their ‘thank you’ letters in this way
without breaching data protection legislation.
- Compare costs and do not be afraid to ask for quotations in writing.
- Make sure you understand fully the terms and conditions
which will apply and if in doubt get the Company to explain it again.
