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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 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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