Scams - Credit Scams
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Several companies take advantage of the fact that a significant percentage of the population has a credit record they want to modify or a financial situation that requires cleaning up. This has given rise to credit repair services. They promise to help one in removing accurate but negative information from one’s credit history, for an exorbitant fee so that one can get that home loan or car loan. However, none of these companies employs legal methods and simply disappears after getting the money. Therefore, it is best to be aware of the credit scams doing the rounds at present.
The different types of scams are mainly Credit Repair Scams who claim to clean up a person’s credit history. However, they cannot legally modify a person’s credit history. Consumers themselves, at little or no cost, can follow the consultation that they offer. Advance-Fee Loan Scams offer consumers with credit problems a guaranteed loan or credit card, for a fee. Some lenders offer credit based on the on the equity of the home and then take to refinancing the loan. In this, the person may lose his home if he defaults on a monthly payment.
Conmen steal a person’s identity in terms of his credit card numbers, social security numbers, mother's maiden names, or other personally identifying information without one's knowledge, to misuse the good credit histories of consumers. They run up bills of thousands of dollars and empty a bank account without the person’s knowledge. People do not get to know about this identity theft until after it has been committed and they have received the bills. This act is punishable by law but one must know the identity of the thief to take action against him. Credit-repair companies to persuade consumers utilize file segregation with unfavorable credit histories to take new taxpayer identification or employer identification numbers from the Internal Revenue Service under false assumptions and use them to hide their true credit identities from creditors. They advise on file segregation for a fee. However, this act is illegal and one can end up in jail for committing a fraud and duping federal and tax authorities.
Debt Consolidation is the best way to eliminate debts. One has to first enroll with a debt consolidation firm, which analyzes one’s debt situation and reduces the debt to less than half. The debt is then remodeled so that the monthly installments become affordable. This helps one to get rid of late fees and taxes and one’s account is re-aged.
One should take the following steps to avoid falling prey to these various credit scams. Credit cards should be immediately signed on receipt, cards should be kept separately and one must keep an eye on the card for possible misuse during transactions. Incorrect receipts should be destroyed and one must immediately reconcile accounts regularly to detect misuse of one’s card. Any irregularity must be immediately taken up with the company for rectification. One must not share personal information on the phone nor leave one’s card lying around carelessly.
An increasingly materialistic lifestyle has lead to an increase in people’s desires and therefore an increasing credit history of debts and loans. However, no third-party can sort out one’s financial problems. It is always better to work out one’s credit history in consultation with credit counselors to arrive at a realistic repayment plan. In this way, one can avoid falling for the credit scams, which offer magical solutions to one’s problems.
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