Avoid Credit Repair Scams
You’re trying to improve your credit and credit scores, but you don’t know where to begin. You start researching “credit repair” for possible help and now your social media newsfeed is blowing up with all kinds of credit repair advertisements.
Signs of a Credit Repair Scam
A legitimate credit repair company will not promise or guarantee results. A credit repair scam usually starts with a company promising or guaranteeing to “fix” your credit score. These companies will often ask for an up front fee before ANY work is completed. Once you pay the fee, you may never hear from them again. If you give them your Social Security number, they may sell it to other companies illegally.
Some credit repair scams will offer a “new credit identity,” claiming they can help you start fresh with a new SSN or what is known as a Credit Privacy Number (CPN), which is illegal. Remember, if you use an SSN other than your own when you apply for a loan or line of credit, you could end up facing steep fines or even criminal charges.
Things to Know
1. You do not need to hire anyone to dispute inaccurate, obsolete, or unverifiable accounts with the credit bureaus.
There are options that you may use to dispute them on your own.
2. The credit bureaus determine whether negative accounts will be removed from the credit report sooner than 7 years. 10 years for a Chapter 7 Bankruptcy.
3. By law, no one can promise or guarantee you a credit score increase or the removal of accounts from your credit reports. Especially during a specific amount of time.
4. By law, “neither you nor any ‘credit repair’ company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report.”
The CROA authorizes you to use a third party to dispute items on your credit reports. It prohibits credit repair companies from making misleading or untrue representations, bans payments in advance, requires written contracts, and ensures cancellation rights for consumers. The CROA is instrumental in preventing repair companies from making misleading claims or using abusive practices.
Specifically, the CROA prohibits credit repair companies from the following business practices:
- Making false statements about how much your credit score will improve.
- Altering your identity to hide negative information in your credit report.
- Making misleading or false claims about their services.
- Engaging in fraudulent activities.
- Charging fees in advance or failing to perform all the services you paid for.