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Helping you avoid problems in the CREDIT REPAIR marketplace

The Scenario:

"Buy now, pay later!"

The phrase had become a mantra for the young man who embraced the credit concept by purchasing everything he had ever wanted. That is, until the "later" part arrived. It brought with it misery and despair as the consumer realized he was in serious financial difficulty. There was no way he could pay his creditors on time. Eventually, he missed a number of payments. Some of his bills were turned over to collection agents while others were simply written off by his creditors. 

That's when other ads stating "Fix bad credit… fast!" placed by credit repair companies grabbed his attention. The ads were everywhere it seemed -- on television, in newspapers, displayed prominently on public transit buses and trains, just everywhere! The young man decided to contact a credit repair company with the hope that they could make his credit woes disappear. They promised to review his credit files and "take care of" his credit problems within six months for $800 up front. The desperate young man agreed. 

Six months later:

Nothing had changed on his credit file. The young man's personal financial situation continued in dire straits. The credit repair company had taken his money and accomplished nothing. 

What happens now?

The Ministry of Consumer and Business Services advises consumers to be wary of advertisements promising to "fix" bad credit. 

Credit repair companies may claim to improve consumers' poor credit ratings, but in reality, no credit repairer has the power to change or erase accurate information in a consumer's file. 

According to Ontario law:

• It is illegal for credit repairers to accept advance payment, or to charge a fee at all unless their services cause a material improvement to the consumer's credit file. 
• Credit repairers must provide the consumer with a written, dated contract.
• The consumer may cancel the contract for any reason within five-days of receiving the contract from the credit repairer.
• It is illegal for credit repairers to make false or misleading claims. 

Know your rights and follow these tips to avoid trouble:

• Check your credit files at least every one to two years to ensure the information is correct. 
• Send a written request to one of the two major credit bureaus in Canada … 

• (or Editor's Note - get your Canadian credit report online inexpensively and immediately for just $13.95).

• If you question an item on the file, the credit bureau will investigate on your behalf. 
• If an error is found, the credit bureau is obliged to correct it. The consumer should present official receipts to the bureau when updating balances. 
• The credit bureau will send copies of the updated file to credit grantors upon request.
• The credit bureau itself does not refuse loan applications. Financial institutions (i.e. banks and other credit grantors) follow their own systems for deciding whether or not to grant credit. 
• If credit is refused, the consumer is directed to a credit bureau to review the information that contributed to the decision. 

Do it yourself. The only sure way to improve a poor credit rating is to work with creditors and show that your payment habits have improved. If you're in serious debt, contact a credit counselor. 

(Editor's Note: Also consider a secured credit card as a way of rebuilding your Canadian credit rating).

Non-profit credit counseling services are available through the member agencies of the Ontario Association of Credit Counseling Services to help people control their debts and solve financial problems permanently. 

To find the agency nearest you, call toll free at 1-888-7-IN-DEBT (746-3328) or visit www.indebt.org.

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