Credit repair scams sprout over lower-income areas | Shopping & Services

Businesses promising "credit repair" for a fee have sprouted all over Memphis, particularly in our lower-income areas.

Consumer advocates who work for the federal General Services Administration's Office of Citizen Services said many credit repair services are illegal -- or they are services you can perform yourself by ordering your own free credit reports and by drafting a disciplined debt pay-off plan.

The GSA's experts said before you commit to a credit repair scam, keep these in mind:

* A credit repair company must give you a copy of the "Consumer Credit File Rights under State and Federal Law" before you sign a contract.

* The company cannot perform any services until you have signed a written contract and completed a THREE-DAY WAITING PERIOD, during which time you can cancel the contract without paying any fees.

* The company cannot charge you until it has completed the promised services, according to the Credit Repair Organizations Act.

* It is illegal to erase timely and accurate negative information contained in your credit history.

* Suggestions that you create a new credit history (called "file segregation") by requesting an Employer Identification Number from the IRS are also illegal.

* You can start repairing your own credit by requesting one free copy of your credit report from each of the three credit bureaus at AnnualCreditReport.com and by working with your creditors to either settle your debt or dispute any errors.