Released: November 02, 2008

Beware promises to scrub bad credit reports

Source: Kenneth R. Harney, Washington Post (Free Registration)

With foreclosures, short sales and credit card defaults at record levels, an aggressive breed of firms has sprung up offering to power-wash consumers’ damaged credit files and boost credit scores, thereby eliminating records of bankruptcies and mortgage delinquencies, even when the information is accurate.

Such services - promoted on the Internet and in radio ads - are attractive to people who want to buy a house but whose credit scores are too low for a mortgage through the Federal Housing Administration, Fannie Mae or Freddie Mac.

The problem with these companies, say federal and state authorities, is that their promises may be deceptive and illegal. On Oct. 23, the Federal Trade Commission and 24 state agencies announced the kickoff of “Operation Clean Sweep,” targeting credit fix-up operations nationwide that allegedly take consumers’ money in exchange for boosts in credit scores that they cannot deliver.

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