Every year one resolution should be to check your credit history. Unfortunately if you wait until there's a problem, you may fall victim to individuals or companies that charge to fix your credit.
Here are my top 10 ways to tell if you are the target of a credit- repair scam.
Number 10: You are not informed of your rights. If they don't explain your rights under the Fair Credit Reporting Act, that's a tip off to avoid them. To protect yourself, learn your rights under the law.
Number nine: There's no service contact. The law now requires these companies to give you an agreement telling you exactly what they will do, the fees they plan to charge and when those fees will be considered collectible. Make sure you get everything in writing.
Number eight: There's no physical address. Most reputable companies will have a physical location, an address that you can go to. If they don't, it is fair to assume that they have something to hide and you have a reason to leave.
Number seven: They won't explain the process. If they won't tell you how the service works or if they're avoiding your questions, or they simply say 'just trust us,' buyer beware.
Number six: They promises to delete bad credit. If they claim they can delete collections, late payments, repossessions or even a bankruptcy filing, be wary. No one can just delete anything. It is up to the credit bureaus, and if the information is correct it will remain.
Number five: You get a 'cold call' after filing bankruptcy. Filing bankruptcy is public record. If you get an unexpected call from a credit repair agency that promises it can get you a new credit report quickly, don't believe the hype. It will only take money you can't afford to lose.
Number four: "We only accept cash." You don't need to become desperate and cloud your judgement. You want to pay by check or some other form of reversible payment so you can create a paper trail; you may need it to protect you.
Number three: The company claims to know a secret loophole. If it tells you that it has a secret system that can improve your credit or that it can do something you can't do, don't believe it.
Number two: The company claims it can create a new credit report. The pitch is for a new record with all of the bad items completely gone. That is illegal and you may be the one in trouble; don't do it.
Number one: The company demands a large upfront payment. This is a huge red flag. The recent Federal Credit Repair Organizations Act prohibits companies from accepting payment before service is rendered. So if someone wants a bunch of money before he starts helping you on your credit, run the other way.
If you need more information about credit repair companies go to www.ftc.gov.