The Scam that Promises to Fix Your Credit

With all the foreclosures and bankruptcies that have occurred in the past four years, many people are desperate to find a quick fix to improve their credit score.  Because of this, thousands are falling victim to a scam that promises to fix your credit, for a fee.  According to an article on Yahoo!Finance.com, entitled "Is There a Legit Company to Fix my Credit Score," this is misleading or false advertising.  All these companies that promise to fix your credit, if you pay them, are lying to you.

The Truth About Your Credit Score

Your credit score is based on your past actions.  If you have paid your bills late, defaulted on a loan, had a car repossessed, gone through bankruptcy, lost a home to foreclosure, or had a medical bill go to a collection agency, this information is reported to the credit reporting agencies for about seven years.  No one else can make those negative items on your credit report permanently disappear.

What Credit Fix Companies Actually Do

There is one exception about having all this negative information on your credit report.  If the information is in dispute, the items have to be temporarily removed from your credit report until the dispute is resolved.  However, once the credit agencies receive proof that the information is accurate, everything will go back on your credit report.  These credit fixing companies will send letters to the credit bureaus disputing all the negative items on your reports, which causes your FICO score to go up temporarily.  After each item has been investigated, however, your FICO score will go back down again.  Essentially, you paid for a short-term solution to a long-term problem.

How You Can Really Fix Your Own Credit Score

There are a few things you can do on your own to raise your credit score.  Essentially, you have to have more positive information on your report than negative information.  Here is some of the positive information they look for:

Pay your bills on time.  Late payments have a huge effect on your credit score.

Pay down credit cards until you owe less than 50% of the credit limit.  The lower you go, the better.  Ideally, you should strive to only owe 10% of your available credit.  This is one reason not to close rarely used accounts.  If you have some that you are not using, it makes your overall use of credit look lower.

Do not apply for new loans or credit cards too often.  When you do, your FICO score can take a temporary dip.  If you do it frequently, it can have a significant effect.

Take care of any liens or judgments against you.  Work out a payment plan, if necessary.

Give it time.  Even a bankruptcy or foreclosure will disappear after seven years.  If you have been good about paying your bills during that time, your credit score will look great as you get closer to the seven year mark.

The bottom line is that you should not pay someone else to fix your credit score.  It is just a scam.  You would be better off using the money to pay off a credit card, or a medical bill before it goes to collection.  Only you can make a lasting change in your credit history.

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