How to Recognize Credit Repair Scams

Learning how to recognize credit repair scams will save you pain and money. The scammers promise to remove negative information from your credit report, so that you can be approved for future credit. They can't deliver on those promises, and the fee you pay to them is lost. The good news is that these scams follow the same patterns, so once you understand how they work, you can avoid them. Here's how they work:

Pay Us First

Credit repair scams work by getting consumers to pay the scam artists money up front, so that they can disappear with it or provide incomplete or inadequate services. You shouldn't pay anyone a fee to repair your credit report, which you can do on your own, and certainly not before they've provided the services they promised. You should also be aware that the Credit Repair Organizations Act makes it illegal for companies to charge upfront fees prior to repairing credit. There are also related state laws that prohibit this practice.

We'll Contact the Credit Reporting Agencies

The pitch made by companies behind credit repair scams is that they'll handle everything, and that there's no need for you to contact the credit reporting agencies on your own. Red flags should go off in your head when any company wants to block you from dealing directly with anyone. If the company you're dealing with tells you this, then you’re probably in the middle of a scam.

Start a New Credit History

Some companies suggest that they can help you start a new credit history altogether by using alternative identification numbers. For example, a company may advice you to obtain an employer identification number (EIN) and to obtain credit using it, instead of using your social security number. That's opening the door to fraud and the company will be long gone with your money when you end up in legal hot water.

We Can Get Rid of Accurate Information

Any information that's accurate on your credit report cannot be removed by you or a "credit repair company." However, this remains to be one of the top credit repair scams going. The company offers to use insider knowledge to remove the record that's accurate, but you have to pay them for their expertise and service. What they don't tell you is that the credit reporting agency cannot and will not do it. To do so for consumers would be to destroy the entire credit reporting system and those agencies aren't going to risk that.

Get a Credit Card from Us

Some consumers feel the need to obtain new credit in order to rebuild their credit. There are credit repair scams to meet that need, and one example consists of the company offering a pre-approved credit card to the prospective victim. All you have to do is call one or more 900-numbers to get your cards. What often happens is that you're charged for the call, and you either get a bogus list of companies offering credit cards or you don't get anything.

Avoiding credit repair scams is difficult if you're feeling hopeless about your debt situation. There are legitimate ways to eliminate debt and get back on the path of good finances for free. Research those strategies first, before seeking help from others.