What is 'Jamming'

Jamming is the name of a scam perpetrated by disreputable credit repair firms, whereby these firms mail out of dispute letters en masse to credit bureaus on behalf of consumers with spotty credit histories. Jamming is so called because it clogs up the dispute process. Since credit bureaus only have 30 days to verify disputes, an inordinately large number of dispute letters would result in their temporary removal from consumers' credit records. These dispute letters request removal of perfectly legitimate information which reflects negatively on a consumer's credit record, such as non-payment or chronic late payments of bills.

BREAKING DOWN 'Jamming'

Jamming is a way that fraudulent credit repair firms make a bad situation even worse for a consumer with a poor credit score. These firms typically charge a substantial amount payable upfront to repair one's credit. The hapless consumer who believes that his or her credit record has been successfully repaired soon finds that the disputed information is back on the credit report, because it was correct to begin with. The customer often has no way to recoup the thousands of dollars they have spent on these services on these services.

Jamming also affects consumers who are legitimately disputing items on their credit records, since the fake disputes filed by fraudulent credit repair firms will clog up the system and delay the resolution of real disputes. According to the Federal Trade Commission, there are five signs to watch out for, if you think you are dealing with a fraudulent credit repair firm. These are as follows: The credit repair company demands upfront payment before doing any work on your behalf; tells you not to contact the credit bureaus directly; tells you to dispute information in your credit report even if it's accurate; encourages you to falsify information on credit or loan applications or does not explain your legal rights.

Jamming and the Credit Repair Organizations Act

Congress has attempted to stop jamming scams through legislation like the Credit Repair Organizations Act, which bars credit repair companies from requiring payment up front, before services are rendered. The law also requires the three nationwide credit reporting companies, Equifax, Experian, and TransUnion, to provide anyone a free credit report at least every 12 months, so that consumers can understand negative entries on their credit reports. Consumers are also entitled to request a free investigation by any credit reporting company, if they believe there has been erroneous information placed on their credit reports. To protect their rights, consumers should contact both the credit reporting agency and the institution which has provided the erroneous information.

RELATED TERMS
  1. Credit Repair

    Taking steps to improve poor credit standing is called credit ...
  2. Credit Repair Organizations Act ...

    The CROA is part of the Consumer Credit Protection Act, and protects ...
  3. Credit Report

    A credit report is a detailed report of an individual's credit ...
  4. Consumer Credit File

    A consumer credit file contains data about a consumer’s past ...
  5. Consumer Credit

    Consumer credit is a debt that someone incurs for the purpose ...
  6. Credit Rating

    A credit rating is an assessment of the creditworthiness of a ...
Related Articles
  1. Personal Finance

    How To Dispute Errors On Your Credit Report

    It just takes some time and effort to rebound from a nasty case of "credit rejection shock."
  2. Personal Finance

    Why You Should Improve Your Credit and How to Do It

    With credit playing a big role in many financial decisions, it is important to maintain good credit.
  3. Personal Finance

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  4. Personal Finance

    Credit Scams To Watch Out For

    More than 30 million people were victims of fraud in 2007. Will you be next?
  5. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  6. Personal Finance

    Take the Right Steps to Build Excellent Credit

    There are several things you can do to protect and improve your credit score.
  7. Personal Finance

    Is Your Credit Score at 850? It Can Be!

    Use these tips to increase your credit score and your ability to get low interest rates on loans.
  8. Personal Finance

    Do You Understand Your Credit Score?

    Most Americans don't really understand their credit scores. Find out what you need to know.
  9. Personal Finance

    7 Things You Didn't Know Affect Your Credit Score

    Having a good credit score plays a big part in being approved for a loan or a mortgage. Here are some things to watch for to keep your credit score healthy.
  10. Personal Finance

    Credit Score vs. Credit Report: Which Is Better?

    They sound alike, but can serve very different ends.
RELATED FAQS
  1. How do a consumer disclosure and credit report differ?

    Find out how consumer disclosures and credit reports are different, even though they contain similar information. Learn how ... Read Answer >>
Trading Center