Avoid falling for a relief scam since credit card debt is on the rise in Florida

You should feel like you’re getting closer to ending your financial difficulties just by giving a credit counseling or credit repair organization a call or clicking a link online.

However, exercise caution. Not every debt relief organization solves issues. There are reputable businesses that can assist, as well as less reputable ones who are con artists. They rely on your desperation for assistance to keep you from realizing that they are about to worsen your already dire circumstances.

Did you not believe that was feasible? Rethink your thoughts. Scams claiming to restore credit can con you and seriously harm your credit. Credit counseling organizations that direct you toward their own programs rather than the one that is most appropriate for your circumstances can be just as harmful.

When making a commitment, especially with credit repair organizations, you should do your research. In May 2019, Lexington Law and CreditRepair.com, two of the biggest in that industry, were sued by the federal Consumer Financial Protection Bureau. The two were charged by the CFPB of utilizing dishonest marketing techniques to entice customers and unlawfully collecting upfront fees from them.

Five Indicators of a Fraudulent Credit Repair Scheme

There are a few clues that suggest you may be working with a shady credit repair business. These are our top 5 picks:

1. They don’t provide you an upfront explanation of your rights. A copy of the document titled “Consumer Credit File Rights Under State and Federal Law” must be given to you by any credit repair company. For example, it informs you that you can free of charge challenge inaccuracies in your credit report. You can handle that on your own without the assistance of a credit repair business.
2. They demand payment in full up front. It’s a serious red flag. A credit repair company is not allowed by law to charge you for services until it gives you a credit report that was created more than six months after it started working with you. Allow them to try to get around this restriction by requiring monthly payments from you. It is unlawful to pay for services in any way before they are finished.
3. Even if negative information is accurate, they claim they can have it removed from your credit report. Nobody is capable of doing this. It will remain for seven years if the negative mark is correct. Nobody is able to let it go. Refrain from falling for it.
4. To establish a “new credit identity,” they pledge. Certain businesses assert that they will generate a CPN, also known as a credit profile number or credit privacy number, which functions as a new credit identity. It is assumed that you will apply for credit using that number rather than your social security number. They may even request that you file for an Employer Identification Number (EIN), which is a legitimate IRS number. You cannot, however, use either number in place of your social security number.
5. Their contract is difficult to read. You don’t know how much you’re paying, what services will be provided for you, how long it will take to complete the services, or that you can cancel the contract for free within three business days.

Indicators of a Reputable Credit Counseling or Repair Firm

If enticing offers that seem too good to be true are indicative of a possible debt relief scam, then transparency and simple language indicate the legitimacy of a business.

Here are some things you ought to view:

• You are informed of your rights by the corporation. You’ll discover that you can write to the credit bureaus directly to dispute information. Paying a company to complete this task is an option that you will consciously choose. The business can explain to you why its services work, but it won’t act as though it’s the only one that can fix your credit.
• The business discusses it with you before coming up with a credit plan. A company cannot offer assistance until they have knowledge of your credit history. Before revealing a strategy, be prepared for them to investigate your credit reports and pose inquiries.
• The business never makes unfulfilled promises. One such bogus promise is raising your credit score by a specific amount of points. However, a credit repair business can present you with testimonials from past clients.

Selecting a Reputable Company for Credit Repair

It’s a good thing if at this time you’re starting to doubt. Making a cautious choice here is rewarded. There are reputable businesses out there.

Verify that the company you select falls under that category by contacting the Federal Trade Commission, your state’s attorney general’s office, and regional consumer advocacy groups like the Better Business Bureau to find out whether any complaints have been filed.

Alternatives to Credit Repair

While there are alternatives, credit repair agencies are one way to improve credit.

Consolidating your debt is a straightforward concept: if you can get a loan with a lower interest rate and you have high-interest debt, take advantage of it. Your monthly payments and the total cost of repaying your debts can both be decreased with debt consolidation. If you are ineligible on your own, you might be able to obtain a reduced rate by finding a co-signer or providing collateral.

Debt settlement: Businesses bargain with creditors to reduce the amount you owe on a debt settlement. Sometimes the settled amount is reduced by up to half of the original debt. The drawback is that future loans will have higher interest rates since your credit score plummets. The IRS may tax you on the forgiven debt if it is deemed to constitute income.

Debt management: To help you pay off your debt, credit counselors can design a plan for you to follow. The counselors collaborate with lenders to bring down your debt’s interest rate—sometimes significantly—and bring down your monthly payments to a manageable sum. The agency receives a single monthly payment from you and allocates the funds to your creditors in predetermined quantities. Although there are costs involved, your debt can be paid off in three to five years.

Examine your credit carefully and come up with a plan that works for you and puts you on the road to financial stability.