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For nearly a year, Jacob Polansky dreamed of buying a black, Honda CBR 1000. At least once a month, he would pop into a motorcycle store, sit on, as he called it, “the black beast,” and dream about the day he would one day drive it home. There was just one thing standing between Polansky and his dream – a poor credit history.
.jpg) It’s the same story for millions of Americans. They can never seem to achieve that dream of buying the bike, the car, the house because of their debt and credit history, and it’s usually at this point they turn to a credit counseling organization.
They aren’t hard to miss. Just turn on your TV, your radio or open a newspaper and an ad is there, promising to erase credit problems. It sounds like a magic wand, touting to make horrors disappear and give you happily ever after.
Just remember, all that glitters isn’t gold, and while credit counseling can indeed open up worlds of wonder, just be careful and ask the right questions.
In fact, the Federal Trade Commission on its website says consumers can save a lot of money by doing it themselves because “…only conscious effort, and a personal debt repayment plan will improve your credit report.”
Check your credit
Deciding it was time to take control of his future and dreams, Polansky logged on to freecreditreport.com, where he not only got his credit score, but a detailed credit report on what his creditors were saying about him. He also signed up for their alert system, allowing him to track changes on his report.
“Whenever there were any changes to my credit, I would get an email alerting me of the problem,” he said. “This way I knew what was happening and could act quickly.”
Polansky chose to pay for his report, but under a new federal law, consumers can receive a free copy of their credit report yearly form each of the three nationwide credit reporting companies --Equifax, Experian, and TransUnion. The three companies have a central website, annualcreditreport.com, where consumers can go and request a copy of their report.
Do it yourself, or go to a pro?
Once he had the report in hand, Polansky’s next step was to come up with a plan. He wavered between calling and negotiating with his creditors himself or hiring a credit/debt consolidation counseling firm.
“I always heard horror stories about these companies,” he said. “People talked about the high fees, with little or no results. I couldn’t afford to get into any more financial messes.”
Use resources around you. Financial institution, local consumer protection agency, and friends and family can usually offer good referrals. If there is a local university, it probably has a nonprofit credit counseling program, so do credit unions and the U.S. Cooperative Extension Service.
Polansky’s decided that the time it would take to research and find a good credit counseling company was better spent working with his creditors.
Stand up for yourself
One of the things the FTC points out is that consumers have more rights than they realize. They have a right to contest incorrect information on their report by writing to both the reporting agency and to their creditors. Make sure to include copies of supporting document and to send the letter by certified mail with a return receipt.
Reporting companies have 30 days to investigate the dispute, and they must provide the consumer with the name, address, and phone number of the information provider. If the investigation shows that the reporting company and the information provider was indeed wrong, the consumer reporting company, not only has to correct the information, but also send notices of the correction to anyone who received your report in the past six months.
However, if there is no resolution to the dispute, consumers can ask that the reporting company include a statement of the dispute in their file.
Look before you leap
While the do-it-yourself worked for Polansky, it may not work for those people who really can’t control their spending and for whom a credit card is an addictive habit. These people may really need the help of a credit counseling firm.
After getting to know you and your financial situation, a good credit counselor can help you develop a realistic budget that would effectively help you to reduce your debt.
Look for companies offering free educational materials and workshops as part of their package, with counselors that are certified and trained in the areas of consumer credit, money and debt management, and budgeting.
Avoid companies that ask you to pay before they provide any service, that recommend you not contact the credit reporting company directly or suggest inventing a new credit identity.
Always remember: you have rights. A credit repair organization must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. It contains protections such as a company cannot make false claims or perform any service without your signature on a written contract.
And if all else fails, trust your instinct. If it doesn’t feel right, walk away.
Credit counseling and getting out of debt can sometimes feel like threading water with little result, but if you keep at it, you could be like Polansky riding that dream bike home.
Copyright 2007 DebtPointLive.com. All rights reserved. This material may not be published, rewritten or redistributed.
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