TEXT OF INTERVIEW
Tess Vigeland: Seems like every week we hear about another bank stumbling on new losses from the subprime mess.
This week, the British government announced it's going to temporarily take over Northern Rock because nobody else wants to save that lender. Credit Suisse and Barclays reported more massive writedowns. Same thing happened last week with UBS.
What it all means to you is that the credit crunch is far from over.
You're going to need great scores to borrow anything from banks these days and we're noticing that there's no shortage of folks who want to help you...
[clip from advertisement]: Zoom Credit specializes in credit repair and debt consolidation too!
Well, before you pick up the phone, we've brought in consumer advocate Ed Mierzwinski.
Ed Mierzwinski: Hi. How are you?
Vigeland: We're doing alright. We've noticed recently that there are a whole lot of these credit repair ads that seem to be flourishing on billboards, on the radio stations. Are we indeed seeing more than ever?
Mierzwinski: You know, it's absolutely true. The credit doctors come out when the economy goes bad. When people need money, they need better credit reports and the credit doctors make promises that aren't true that they can fix your credit report and they make a lot of money even though what they do is absolutely illegal.
Vigeland: Do any of these credit doctors have the equivalent of an MD in their field?
Mierzwinski: No. We call them credit repair doctors, or credit doctors for short, because they claim they can doctor your credit.
Vigeland: What do these agencies promise that they will do? What's the process that they say they're going to take you through?
Mierzwinski: The basic form of credit repair is bombardment of the credit bureau with phone calls and letters, hoping that multiple complaints, multiple investigations will overwhelm the credit bureau computers, overwhelm the credit bureau customer service staff, but the thing is, credit bureaus are smart enough to know that if they get 100 letters from one consumer, it's probably coming from a credit doctor who's trying to trick them into changing the consumer's file.
Vigeland: And what are they charging for that?
Mierzwinski: Well, a credit doctor might charge $300 per application to fix your credit or they might charge a monthly fee of $20 or so to provide continuing credit doctor services.
Vigeland: What else do they say that they can do for you?
Mierzwinski: They started offering people new Social Security numbers. Now, of course, it's very difficult to get a new Social Security number, but it's not so hard to get a new business-type of Social Security number that is often used by the IRS for either non-residents or for business applications and then what would happen is you would get this new form of a Social Security number -- it has the same number of digits -- known as Taxpayer Identification Number and you would associate your new accounts with that number and the credit doctor would tell you that all your old information won't appear when they generate your credit report based on this new TIN.
Vigeland: Well, should you trust any of these credit repair agencies?
Mierzwinski: Absolutely not. If you can't pay your bills, find a legitimate consumer credit counseling office. Don't go to any form of credit repair company.
Vigeland: If you've already signed up with one of these outfits, is it possible to get out?
Mierzwinski: Absolutely. You want to complain to your state Attorney General and you want to complain to the local Better Business Bureau if you believe that a credit doctor has taken your money and is continuing to take your money.
Vigeland: Alright. Ed Mierzwinski is the consumer program director with the U.S. Public Interest Research Group. Thanks so much for your time today.
Mierzwinski: Thanks for having us on.