ATTORNEY GENERAL

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.

AVOIDING CREDIT REPAIR SCAMS

DON'T BE TAKEN IN BY QUICK FIX AND OTHER CREDIT REPAIR OFFERS THAT SOUND TOO GOOD

TO BE TRUE

With a slowing economy where more people are struggling to keep their heads above water and a credit crunch that makes it harder to qualify for a loan, advertisements for credit repair help may sound enticing. In newspapers, on the radio, TV, and the Internet, the claims are familiar: "Credit problems? No problem!"... "Overhaul your credit in 30 days!"... "Erase bad credit- Guaranteed!"...Create a new credit identity-legally!" The truth is, there are no quick or easy cures for a poor credit history, and you can't buy good credit. Don't be taken in by offers for a miraculous credit repair fix.

Recognizing a credit repair scaM

Whether pitching services, do it yourself guides, even software to start your own work-at-home credit repair business, be wary of companies that promise, for a fee, to clean up and fix your credit report. No one can legally remove accurate and timely negative information on a credit report. Some tell-tale signs that a credit repair offer is up to no good include:

The offer wants you to pay for credit repair services up-front, before any services are provided. Under the federal Credit Repair Organizations Act and Michigan Credit Services Protection Act, a credit repair company cannot require payment until they have completed the services they have promised.
The offer says the company can get rid of most or all negative credit information in your credit report, even if the information is accurate and current.
The offer includes a suggestion that you create a "new" credit identity - and then a new credit report - by applying for an Employer Identification Number to use instead of your Social Security number. It is illegal to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
The offer includes advice that you dispute all the information in your credit report, regardless of its accuracy or timeliness.
The offer includes guaranteed results. Guaranteeing or stating that the company is able to delete negative credit information (which is not inaccurate or obsolete) is illegal under the Michigan Credit Services Protection Act.

KNOW YOUR RIGHTS

If you respond to a credit repair offer, know your rights.

You have the right to cancel a contract with a credit repair organization for any reason within three business days from the date the contract was signed.
Before you sign a contract, a credit repair organization must provide you a copy of a one-page document that outlines consumer rights in disputing inaccurate information on their credit report, and rights in dealing with credit repair organizations (entitled Consumer Credit File Rights Under State and Federal Law).
Before providing any services, a credit repair organization must provide a written contract that spells out your rights and obligations.
A credit repair organization cannot charge you until they have completed the promised services

FOR MORE INFORMATION AND SELF-HELP CREDIT REPAIR

Federal law allows consumers to ask for an investigation of information on their credit report that is disputed as inaccurate or incomplete. There is no charge for this. While some people hire a company to investigate on their behalf, anything a credit repair clinic can do legally, you may be able do for yourself at little or not cost.

For information on how to order your credit report and what to look for when reviewing it, please refer to the Attorney General's Consumer Alert "Free Annual Credit Reports-What Consumers Should Know" at: www.michigan.gov/ag/0,1687,7-164-34739_20942-111010--,00.html .

For information on how to ask for an investigation of information on your credit report that you dispute, and how to improve your credit worthiness, please see the following Federal Trade Commission publications at: www.ftc.gov/bcp/menus/consumer/credit/reports.shtm

How to Dispute Credit Report Errors - Explains how to dispute and correct inaccurate information in your credit report, including a sample dispute letter.

Building a Better Credit Report - Learn how legally improve your credit report, how to deal with debt, how to spot credit-related scams, and more.

Consumers may also get free information from the Federal Trade Commission by calling, toll-free 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

Consumers may contact the Attorney General's Consumer Protection Division at:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909

517-373-1140
Fax: 517-241-3771

Toll free: 877-765-8388

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ATTORNEY GENERAL