A credit counselor exists to help you build and repair credit. They offer life-changing advice and systems that result in real change. Unfortunately, like other service providers, there are individuals and small operations that exist only to take your money and not help you in any meaningful way. Sometimes with so many options out there, it’s difficult to know the difference between the two. In this article, we’ll break down how to recognize a credit repair scam vs. a reputable credit counselor.
How to Recognize a Credit Repair Scam
Pressures you for Up-front Fees
The credit repair company that asks you to pay before it provides any services is a red flag. Under the federal Credit Repair Organizations Act, credit repair companies can’t request or receive payment until they’ve completed the services they’ve promised.
Promises to Remove Negative Information from Your Credit Report
The company tells you it can get rid of negative credit information even if the information is accurate and current. No credit counselor can make such a guarantee in good faith. In some circumstances, they may be able to make a negotiation for early removal, but there are no guarantees.
Avoids Explaining Your Rights
Often shady credit repair scammers will avoid telling you what you can do for yourself for free. Disputing errors on your credit reports for example is a free legal right available to you under the Fair Credit Reporting Act.
Tells you Not to Contact Credit Reporting Companies
A reputable credit counselor will advise you on your options, and recommend what in their view is the best route for you to achieve your credit goals. Part of this process often entails you taking advice and acting on it in the form of contacting a credit reporting agency. Open and honest dialogue is the best way to get back on track with your credit. If a company says you should never contact a bureau, then it’s likely they’re not working with your best interests in mind.
How do I Find a Reputable Credit Counselor?
Credit repair companies are subject to many federal laws, including the Credit Repair Organizations Act and when applicable the Telemarketing Sales Rule. Both forbid credit repair organizations from using deceptive practices and from accepting up-front fees.
A reputable credit counseling agency should be willing to send you free information about itself and the services it provides without requiring you to provide any details about your situation. If a service doesn’t do that, consider it a red flag and go elsewhere for help.
Credit Expert LLC has helped countless individuals and businesses build their credit scores.