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Beware credit repair scams
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People already in debt trouble fall prey to false promises
Average credit card debt in America has more than doubled in the last decade. But can companies that offer to fix indebted cardholders' credit history really do anything? NBC's Lisa Myers investigates.
By Lisa Myers
NBC NEWS
April 30 —  There are companies that offer to fix your credit history, but can it really be done? It's becoming more and more of an issue for millions of Americans, whose average credit card debt has more than doubled in just the last decade. So if you or a loved one get in trouble with one or more credit cards, can you pay to have someone get you out of the credit crunch?

     



       LANCE HODGIN found himself in big time trouble after a thief stole his wallet and his identity two years ago, ringing up a staggering $65,000 in credit card charges.
       "I don't really know what I did to deserve this,” says Hodgin. "It's been a nightmare ever since.”
       All his credit was cut off, so in desperation, Hodgin paid $400 to a so-called credit repair company, which promised it could wipe the slate clean. Now, Hodgin has been had — twice.
       "I feel like I'm a victim again for paying money to a company to fix it, and it hasn't been done yet,” says Hodgin.

And federal investigators say it will never get done.

"The credit repair people that claim that there's a magic bullet, a loophole in the laws that's going to let you instantly fix your credit, are lying to you,” says Steven Baker at the Federal Trade Commission. "It's not true.”
       The Federal Trade Commission warns that credit repair scams are everywhere, in newspapers, on more than 180 Internet sites, promising "perfect credit” or the power to "erase” problems.
       In a crackdown, federal prosecutors charged two men last week with bilking 7,000 people out of more than $1 million through a fraudulent credit repair scheme, known as First National Financial. NBC News' attempts to reach the company failed.

The company's address in New York city turns out to be a store with a rented mail box.
       Part of the alleged scam operated out of an office building just two blocks from the White House. Consumers were told they could start a new credit record by getting a new number to replace their Social Security number. That's illegal.
       "Not only is it not going fix their credit problem, there's a good chance they could end up going to jail,” warns Baker.
       So what should you do if you have problems? Experts say avoid anything that calls itself credit repair and "the best advice for somebody who has dings or dents on their credit file is to actually work through it themselves,” says Paul S. Richard, RFC of the Institute of Consumer Financial Education.

       If Hodgin had done it himself, he'd be much closer to getting back his credit cards and closer to buying a boat for his family.
       

 
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Love, Greg and Lauren - Greg Manning
Love, Greg and Lauren - Greg Manning
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