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Chapter 15. Scams > Credit Repair Services

Credit Repair Services

We have all seen the ads for credit repair services, some of them legitimate and others quite illegitimate. According to the law, adverse credit information remains on your credit report for seven years except for bankruptcies, which stay on your credit report for ten years. Despite what you may be told by some credit repair services, information that is correct and verifiable cannot be removed from your credit report. If you find incorrect information on your credit report, you may request the credit reporting bureau to investigate the item and remove it if it is either shown to be incorrect or even if it merely cannot be verified.

The Federal Trade Commission has been cracking down on illegitimate credit repair companies. In 2001, it took action against almost 200 phony credit repair promoters. In Federal Court in Texas, Clifton W. Cross was not only ordered to pay $171,000 in restitution to defrauded customers, but was also sentenced to 49 months in federal prison. Clifton Cross, through his company Build-it-Fast, used a website to entice customers to hire him to show them how they could erase their old bad credit by getting a new clean credit report. At the crux of this scheme was an old technique called file segregation. Cross sold instructions to customers that told them how they could obtain an employer identification number from the IRS to use instead of a Social Security number. This number has the same number of digits as a Social Security number and was used in the past by people to hide bad credit and establish a new, clean credit report. Obtaining an employer identification number for this purpose is a federal crime. In addition, advising consumers as to how they can hide their true credit histories is also a violation of the federal Credit Repair Organizations Act.


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