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Credit Repair Scheme

July 22, 2019

Beware of the latest credit repair scheme.  A company promises to help you rebuild your credit by setting up a bogus loan scheme that reports to the credit bureau as paid on time.  Supposedly the report to the credit bureau helps to elevate your credit score.

The problem is that you will pay money to the company for a period of three years, based on a contractual obligation to do so.  You will be charged interest on the loan (that you will not actually receive until the end of the three-year term).  The company retains the interest and charges several different fees, some are obvious in the terms of the contract some are not as obvious but still disclosed, for their services. 

At the end of three years of making regular payments, which will report positively to the credit bureau, you will finally get the “loan” which is basically whatever funds are left (not much) after administrative fees and interest have been deducted.  If you are late with any payments or have any NSF cheques these will also be reported to the credit bureau and will have a negative impact on your credit report.

It is difficult, at best, to see any possible way these credit rebuilding schemes are good for you, they are costly and do little, if anything, to help you repair your credit.  Even a bankruptcy will typically help you get started a lot faster and a lot cheaper.  Consider all your options, before you get caught up in of these arrangements talk to a Licensed Insolvency Trustee.

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