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Attorney general warns of “quick fix” credit repair scams

INDIANAPOLIS (WISH) — If you are in debt or have a low credit score, Indiana Attorney General Greg Zoeller says there are scammers out there ready to take advantage of you.

If you’re looking to buy a home, a car or even applying for a new job, your credit score can make all the difference.

“It shows the amount of accounts you have open, what has been your payment history over time…and how much do you owe?” said Lisa Piercefield, regional manager of Apprisen.

Apprisen is a non-profit that helps consumers tackle their financial problems.

“If your credit is less than perfect, or less than stellar you can either be denied for employment, you could be denied for rental or for a mortgage,” said Piercefield.

Or, you may get the loan with less than ideal terms.

Piercefield said if a consumer takes out a $150,000 30-year fixed rate mortgage, and has a FICO score of 760-850, they may get an interest rate of 3.65% with a monthly payment of $686.

If the consumer’s credit score is 620, they may get 5.2% interest rate that costs $827 every month.

“In the long run, $130-140 over the course of 30 years is a huge amount of money,” said Piercefield.

That’s why credit scores are so important, and why Zoeller said scammers prey on people in debt, with poor credit.

“They’re probably scared into a position of doing things without taking the time to learn about what steps are available,” said Zoeller.

You may see signs, hear an ad, or get a text or call, advertising a quick fix to your credit.

“There isn’t a quick fix to your credit,” said Piercefield.

In an effort to stop scams, Indiana requires a $25,000 bond for credit counseling services.  If the agency doesn’t do what it promised the state goes after the bond.

“We saw so much problems with the debt counseling and mortgage foreclosure relief services, that we asked that they require a bond be issued…If the services aren’t rendered, we have a bond to go after,” said Zoeller.

“So, again — this is the number one thing we asked of the legislature back in 2010. It’s really helped us, prove up cases because if you ask for a bond, only the reputable players are going to be in the business,” said Indiana’s Attorney General.

The bond also helps you decide if a company is legitimate.

“Make sure the company has a bond. That will eliminate the vast majority of the people that come to you either on radio or online or by phone,” said Zoeller.

If the company isn’t bonded, that’s your first red flag.  Zoeller said you should also beware if you’re on the do-not-call list and the agency calls you.

“If you’re on the do not call statute, they’ve already violated…we’ve seen a lot of these people who are out calling on people that are in trouble, and have some kind of financial problems. If they’ve called you, and you’re on the do not call list, they’ve violated our statute and you ought to really beware,” said Zoeller.

Another warning sign is if the company asks for a payment upfront. A crooked agency may guarantee to clear your bad credit history.

“They’re targeting people who are desperate. They’re in financial crisis, so they’re vulnerable,” said Zoeller.

Zoeller said consumers shouldn’t have to pay to build credit back up.

“Look for some reputable help. There’s a lot of free services, for people who are in debt, who need some kind of help,” said Zoeller.

“Certainly, don’t pay someone to repair your credit if you will, because you can do that yourself for free,” said Piercefield.

Experts say the first step is pulling your credit report and seeing what’s on it. Then, dispute any inaccuracies, come up with a plan to tackle your debt, and avoid borrowing any more money.

Even if you pay outstanding debt, your credit score won’t rebound immediately. Experts say it will take time — years in most cases.

“The hard work and effort that goes into it, sometimes seems overwhelming. I always like to say, ‘how do you eat an elephant? It’s one bite at a time.’ So you just, if you can’t look at the overall, big picture, let’s start small and focus on a couple of things you know you can reach,” said Piercefield.

Consumers can get their credit report for free through Annualcreditreport.com. Each credit bureau — TransUnion, Equifax and Experian — gives consumers a free credit report every year.

Zoeller recommends contacting Indiana Legal Services if you need help repairing your credit. Consumers should check any credit counseling agency with the Attorney General’s office.

The Attorney General’s office provided these reminders about credit service organizations:

  • Negative but accurate credit information cannot legally be removed from a credit history except by the passage of time.
  • No one can guarantee to erase bad credit.
  • You can remove inaccurate or outdated information from your credit report yourself, at no cost.
  • It is illegal to allow a credit service organization to set up a new credit file for you.
  • Do not pay credit service fees before the services are completed.
  • Indiana law gives you the right to sue credit service organizations for the greater of twice your actual damages or $1,000 plus attorney fee.