Are you interested in debt consolidation? Credit counseling? Well, some offers being made to you are needlessly expensive or downright illegal. Dwight Kealoha is CEO of the Hawaii's Better Business Bureau.

From a notice from Hawaii's Better Business Bureau, released October 31, 2008:

Hawaii's Better Business Bureau® (BBB) issued an alert today warning consumers to be aware of companies taking advantage of the credit crunch by promising bogus credit repair services that can be costly and in some cases illegal. With lenders becoming increasingly strict with their loan and credit qualifications, many people are looking for fast, easy ways to fix, or even, erase damage to their credit history.

Consumers are often persuaded by offers for miraculous credit repair in radio, television, newspaper, online and direct mail advertisements. Some offers require consumers to pay large fees upfront and in return promise to erase any blemishes on credit records, get new Social Security numbers for clients, or allow consumers to piggyback on someone else's credit record. BBB wants consumers to know that no one can legally remove accurate and current negative information from a credit report, that it's nearly impossible to get a new Social Security number, and that piggybacking on someone else's credit can be seen as loan fraud.

"People need to be very careful when searching for or using a credit repair agency," said Dwight Kealoha, chief executive officer of Hawaii's BBB. "Consumers are being charged for work they could have done on their own for free and in the worst case scenarios, consumers are unwittingly encouraged to engage in illegal activities."

Complaints to BBB about credit repair companies have increased in the last year. However, 30 percent of those complaints were unanswered, meaning the company refused to respond to the complaint. In all types of businesses, a single unanswered complaint results in an unsatisfactory rating on a company's BBB report.

BBB Advice On Choosing a Credit Repair Company

By law, credit repair organizations must provide a copy of the "Consumer Credit File Rights Under State and Federal Law," a one-page document that outlines the consumer's rights for disputing inaccurate information on their credit report and addresses their rights in dealing with credit repair companies. "Consumers should know they have the right to cancel a contract with any credit repair organization for any reason within three business days from the date the contract was signed, one of the key points of the law," emphasized Kealoha.

If you decide to respond to a credit repair offer, BBB suggests you beware of companies that:

• Do not tell you of your legal rights and what you can do - legally - for free;
• Recommend that you not contact a credit bureau directly;
• Want you to pay for credit repair services before any services are provided;
• Advise you to dispute all information in your credit report;
• Take any action that seems illegal, such as creating a new credit identity by obtaining a federal employer identification number to use instead of a social security number; or
• Offer to let you "piggyback" on other consumer's good credit.

Before contacting a credit repair service, first check its BBB Reliability Report™ online at www.bbb.org.

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