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Common Credit Repair Scams

Maybe you’ve considered using a credit repair service to help you repair your damaged credit. A
legitimate credit repair company can help you to remove incorrect negative items from your
record that may be affecting your credit score.

Even though you can improve your credit score yourself, using a credit repair company only
helps to make the entire process easier and this is the more reason many people are on the
lookout for legitimate credit repair companies.

The truth is these days, many scammers are on the search to take advantage of ignorant
people who are looking to repair their credit.

What’s A Credit Repair Scam?

A credit repair scam is a company that gives you a false guarantee to erase your bad credit. So
what these companies do is collect your money, don’t help improve your credit and then run
away, leaving you to start all over again.

Take note that not all credit repair companies are scams. Companies must follow industry
regulations stipulated by the Credit Repair Organizations Act (CROA).

The CROA is a federal law that protects consumers by defining what credit repair agencies can
and can’t legally do when providing their services. Companies that do not abide by the CROA
regulations are illegitimate.

So, improving your credit won’t happen in a flash, it takes time and dedication to good credit
habits to build up your credit.

Even though there are legitimate credit firms out there that can help you repair your credit, there
also exist several credit repair scams that want to rob you of your money and your information
too. To avoid falling victim to this scam, here’s what you should put in mind.

The first thing is to get yourself armed with accurate knowledge, for instance, if what a credit
repair company is promising sounds too good to be true then you should beware. Take note that
there are several things credit repair companies aren’t allowed to guarantee their clients. Below
is a list of common credit repair scams;

They ask for upfront payment: According to the Credit Repair Organization Act, CROA,
credit repair companies are not allowed to ask for payment before offering their services and
because many people don’t know this, many fraudsters often guarantee a quick credit repair for
a huge upfront payment.

Meanwhile, all credit repair companies are mandated by law to give you at least three days to
cancel using their services and there’s no penalty for that. On the other hand, scammers will not
allow you to cancel unless you pay a fee.

Tradeline renting: This is used to improve your credit score. Essentially, tradeline renting is
when you pay for an “authorized user status” so the tradeline can reflect to improve your credit
score. Even though this doesn’t repair any negative information on your credit, it helps to add a
positive tradeline to your credit. So, a loved one can make you an authorized user but the
danger in using this approach is when you rent a tradeline from a stranger, you can’t tell how it
will impact your credit plus it can be a scam to get your money.

They offer a non-customized repair strategy: If a credit company is offering a repair strategy
without first evaluating your credit reports or credit history, then such is just a scammer. A
genuine credit repair company will factor in the fact that everyone’s credit history is different and
create a customized approach for the situation at hand.

They promise results: Based on the Credit Repair Organization Act, CROA, credit repair
companies shouldn’t promise results. Some common false guarantees credit repair companies
make include;

  • removing all negative items even when they’re accurate.
  • guaranteeing results in a fixed time.
  • improving your credit score.

They misrepresent your information: This is a case where a credit repair company is asking
you to misrepresent your information by telling you to claim you’re a victim of identity theft when
that isn’t the case. So you may be asked to use your CPN number or EIN in place of your social
security number. In cases like these when they’re making efforts to twist your real information,
you should beware.

They offer you a new identity: You should beware when a credit repair company tells you a
new identity is what you need and this is because a credit company can’t offer you a new
identity. To do this, they may offer you a new Employer Identification Number or a credit Privacy
Number to use for subsequent credit applications instead of your social security number, a CPN
is a fake social security number that’s created by using someone else’s identity. All these are
just to provide you with a new identity which isn’t in their place to give.

They don’t tell you of your legal rights: From the outset of contacting a credit repair
company, your legal rights should be explained to you, if this isn’t the case, then you should
watch out. The moment you feel the company isn’t answering your questions or telling you all
you should know, you should opt for a credit repair service somewhere else. Meanwhile, here is
some of the information they might keep away from you;

  • they don’t allow you to review the contract before signing.
  • they remove important information from the contract for example when the services will be implemented.
  • they inform you not to contact the credit bureau by yourself.
  • they don’t tell you you can fix your credit yourself without any credit repair company.

They don’t communicate with you during the process: Many scammers won’t bother to keep
you up-to-date with their progress and this is a red flag as you shouldn’t be in the dark while
they are carrying out their services.

So basically, here are the common credit repair scams and these signs will help you steer clear
of falling victim to these. If you don’t want to repair your credit by yourself, you should carefully
look out for genuine credit repair companies that can help you repair your credit.