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Four Steps to Avoid Credit Repair Scams

Beware of the Scams

Falling for credit repair scams can be emotionally devastating and wind up costing you a lot of money. If you have found yourself in a situation where your credit score is less than desirable, there are many companies out there that can help you to rebuild your credit score. While there are many legitimate companies that can help you however, there are also companies out there that who try to scam you and who prey on those who are vulnerable and need help. Here are four steps to take to avoid credit repair scams.

Step 1: No Outrageous Claims

If a company is claiming to easily erase anything and everything negative on your credit report or that they can restore your credit without a problem, proceed with caution. Negative information cannot simply be erased unless it is invalid or inaccurate. If it is accurate, then it has to stay on your credit report for a predetermined amount of time. A company that tells you they can simply erase anything negative from your credit report should not be trusted and you should stay away from them to avoid falling for a credit repair scam.

Step 2: Client Education

Legitimate credit repair companies should aim to educate their clients in the process of credit repairing and be able to inform you as to why your credit was damaged in the first place. If a company tells you not to contact the major credit reporting companies directly or tells you that you will be unable to repair your credit on your own, then you should avoid that company because they are not telling you the truth. The Fair Credit Repair Act (FCRA) allows for consumers to contact and dispute items on their credit reports on their own. Legitimate companies can be huge timesavers for consumers; sending and tracking the disputes.

Step 3: No Up-Front Fees

Authentic credit repair companies will not require complete payment upfront. Usually companies charge a setup fee to review your reports and generate the dispute letters. Then you will be assessed a monthly fee for the continual work on your case and tracking of the disputed items. Many companies offer a money back satisfaction guarantee for their service, always a good sign for potential customers. Companies that request full payment up-front before they have performed the services may be a credit repair scam.

Step 4: Don’t Change Your Credit Identity

Some illegitimate credit repair companies try to convince their clients to create a new credit identity by applying for an employer identification number to use for their credit report instead of their Social Security Number. Doing this can be considered fraud and any company that encourages this practice is most likely a scam and should be avoided at all costs. Well-respected companies not only work to remove the incorrect negative items from your report, but also teach you how to improve your credit score in other ways.