Can Credit Counseling Services Rip You Off?

Credit Counseling companies can offer a great service. They can help you create a debt management program to help you eliminate or reduce your outstanding debt.

However, there are many credit counseling services that are fraudulent. Learn to protect yourself from credit counseling scams.

Here are a few things to look out for when choosing a credit counseling service.

Never trust a company that claims it can remove negative information from your credit report if it is accurate. You can only remove false or inaccurate information from your credit report. If a credit counseling agency promises that they can remove accurate information from your credit report, hang up the phone or leave.

Be suspicious of any debt counseling agency that advises you to making false statements such as dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. Believe it or not, you can be convicted of a crime and prosecuted if you make false statements on a loan or credit application.

Walk away from a credit counseling service that requires you to pay an up front fee for credit repair services before any services are provided.

Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services.

They also must give you a written contract that spells out your rights and obligations and give you a copy of a pamphlet called Consumer Credit File Rights Under State and Federal Law before you sign the contract.

The National Foundation for Consumer Credit, the nation's oldest and largest non-profit financial counseling organization, has 1,450 affiliated offices throughout the U.S. To find a local office near you, call (800-388-2227) or visit www.nfcc.org.