Myth: You can pay someone to make bad things on your report “go away.â€
Reality: Services like this are more than likely a scam. According to the Federal Trade Commission, their attorneys say that they have never seen a legitimate credit repair company making claims to remove bankruptcies, erase bad debt, or create a new credit identity. Any company that claims they can do this is lying to you. The FTC says you can spot one of these scams by looking out for some of these red flags:
- The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they promised.
- The company doesn’t tell you your rights and what you can do yourself for free.
- The company suggests that you try to invent 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.
Myth: Employers can see your credit score.
Reality: Employers don’t have access to your credit score, only your report. If you’ve given written permission for an employer to do a background check, the package they receive will include information about your financial history. Employers receive a modified version of your credit report (known as an employment report) from the three major credit reporting agencies,
Myth: credit counseling will lower your credit score.
Reality: Participating in a debt management program through a credit counseling service is not considered a negative mark on your credit report. Before you
Related link: 4 Credit Reporting Myths and Realities
Sheiresa Ngo is the consumer affairs editor at Black Enterprise.
For more on credit report myths, pick up the December 2010 issue of Black Enterprise magazine, on stands now.