Beware of credit repair promises that fall short

Introduction

Advertisements offering to 'clean your credit reference file' or 'restore your credit rating' by rubbing out any record of debt, should be treated with caution according to the Government's consumer protection authority.

The Office of Fair Trading warns that the information given by so called credit repair companies may be wrong, misleading or guaranteed to get you into worse trouble - and ensure that you are even more out of pocket. They may also be a 'front' for a lender or broker who is simply trying to sell you a loan.

Typically the companies say they can remove unfavourable information, such as county court judgments, from your credit files and give guidance on how to make a successful application for credit. Often the advertisements urge you to call a costly premium rate telephone line for more information.

John Bridgeman, Director General of Fair Trading, said
"These companies offer nothing that you cannot do for yourself. County court judgments cannot be removed from credit files unless they have been discharged or were incorrectly granted. Unsubstantiated claims that a court summons was not received or that correct procedure was not followed will not persuade a court to remove a judgment from its records.

"It is possible to check for yourself what is on your files and request that corrections are made if the information is incorrect. Advice and guidance on this is available from your local trading standards department and local citizens advice bureau.

"Some credit repair companies provide booklets containing advice on how to make successful applications for credit. These explain the system of credit scoring used by many lenders and suggest answers by which you can score high points. What they don't say is that supplying false information on a credit application form could amount to fraud, which is a serious criminal offence. Don't be tempted."

Credit files on almost every adult in the UK are kept by credit reference agencies which supply information about your credit record to lenders. If you are refused credit, lenders do not have to tell you exactly why they have turned you down but they should give you an indication of the reason such as information provided by a credit reference agency.


How Credit Referencing Works

Introduction
Basically, a lender wants to make sure that you are likely to repay a loan, honour a credit card or other credit agreement or pay for goods bought or rented on credit.

To help them decide, most lenders have other information, usually supplied by you on an application form - for example details of your occupation and wages - which is not held by credit reference agency. It helps lenders check your name and address or shows whether or not you have any County Court Judgments or are bankrupt and shows how you are managing your credit agreements.

If you are up-to-date with payments, this is likely to help you to get more credit. If you are behind with payments, a new lender may want to look more closely at your application. Adverse information, such as a County Court Judgment, a bankruptcy or a defaulted account, stays on the record for six years. So it is sensible to make sure that you understand the information held and that it is as up-to-date as possible.

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It is my belief that one should never use or pay a credit repair company to do anything. The reason is that even if they were successful and got rid of all your adverse listings it would become nothing more than an exercise in futility the moment some lawyer filed a lawsuit against you for the debts you didn't pay.

So even if it is successful it is still nothing less than an exercise in futility. On top of that there are much better ways to go about it.

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I agree that the mass market credit repair services do more harm than good. The credit repair services did a great deal to add to the current mortgage mess, but, I would not label them with an absolute.

That said, sometimes there is a need for credit repair attorney in cases of identity theft. There are also some situations, like divorce, where one party is subject to the bad credit of another.

IMHO: The division is: If you are looking at an actual error on a report, then correcting that error improves the quality of the report.

There was a period of time when credit bureaus did not respond to individual requests for corrections to the credit history. Today they are much more amenable to requests for real corrections.

The market that should be seeking credit repair is small and getting smaller.