Spotting Credit Repair Scams
If you have less than favorable credit, repairing your credit can be an uphill battle. You’re looking at months of hard work negotiating with creditors, reworking your budget, and identifying the factors that are making your credit score fall behind. In short, it’s a hassle and it takes lots of time. Legitimate credit repair companies exist, but without educating yourself first, you may find it tricky to find the certified professionals rather than the scammers who only want your money.
Credit repair scammers will tell you they can repair your credit quickly and easily. Unfortunately, once they’re done, your score may still be low, you’ll have lost a nice chunk of change, and you could even be facing criminal charges.
Keep a wary eye out for these warning signs of a credit repair scam:
Requests upfront payment
Under the Credit Repair Organizations Act (CROA), credit repair companies are forbidden to request or receive payment until they’ve completed the services they’ve promised. If they ask you to pay before doing any work or claim to require a hefty deposit, they’re likely illegitimate.
Makes big promises
Scammers may claim they can remove negative information from your credit report, even information that is accurate and current. However, this is not possible; don’t fall for these claims. They might also promise to boost your score in just a few weeks. Unfortunately, it doesn’t work like that. It takes at least 30 days for changes to be evident on your credit report.
Offers a “new credit identity”
In these scams, companies promise to create a new credit identity for a fee. After you pay, the company will provide you with a nine-digit number. They may refer to this number as a CPN – a credit profile number or a credit privacy number. Alternatively, they may direct you to apply for an EIN – an Employer Identification Number. The company instructs you to use this form of ID to apply for credit, telling you it is legal. It’s not – this is a scam. These companies are selling you a stolen Social Security Number. They walk away with your money, leaving you in hot water for committing multiple federal crimes. Falling for a credit identity scam could result in facing fines or even prison time.
Tells you to dispute accurate information on your credit report
Disputing accurate information on your credit report is illegal. The Free Credit Reporting Act provides you the right to dispute inaccurate information on your credit report. Disputing any inaccuracies is your legal right, available to you for free. There is never any need to pay someone else to file a dispute on your behalf, so beware of anyone claiming to be able to.
Evasive when questioned
The Credit Repair Organization Act made it illegal for credit repair companies to lie about your rights and their services. These companies must explain:
- A written contract detailing your legal rights
- Your three-day right to cancel the contract without charge
- The anticipated time it will take until results are evident
- The total cost you will pay for their services
- Their guarantee
If you’ve hired a credit repair company that hasn’t lived up to its promise, you can choose to sue the company for your losses in federal court. Along with other victims, you can file a class action lawsuit against the company. It’s best to report the scam to your local consumer affairs office or to your state attorney general. You can also file a complaint with the Federal Trade Commission (FTC). File your complaint online or call 1-877-FTC-HELP.
Remember, if you’re in financial trouble of any kind, we can help! Stop by a Robins Financial branch today and ask for your free financial review. You can also check out Money Manager, our free personal financial management tool within Digital Banking that gives you the assistance you need for successful budgeting.
At Robins Financial Credit Union, safeguarding our members’ information is a top priority. We have tools in place that help you monitor and track your finances, so you’re never caught off guard. We even help you monitor your FICO® Score by providing eligible members access to view their FICO® score within Digital Banking. To learn more about how we protect our members every day, give us a call or stop by any of our branch locations.