Credit Repair Scams to Look Out For
There’s more than one disadvantage to having a low credit score. To make matters worse, scammers often prey on consumers with poor or damaged credit. They take advantage of this vulnerability in numerous ways; while a credit repair scheme may seem legitimate, people in dire straits often don’t take the time to recognize the signs. But you can avoid becoming a victim by spotting these red flags:
You Don’t Get a Copy of the Contract
You should receive and review a contract before signing on with any credit repair service. If not, ask for a copy of the contract with detailed information. It should identify:
- What you’re being charged
- The services to be performed
- The date or time period you are being served
- The name and address of the business
- Your right to cancel the contract with three days
Unless you know what you’re signing up for, don’t agree to or pay for any services the company claims to provide. The servicer should also provide you with a copy of the Consumer Credit File Rights Under State and Federal Law.
You’re Asked for Payment Prematurely
It is against the law for a credit repair company to request payment before performing any services. The Credit Repair Organizations Act (CROA) forbids this activity. However, many consumers don’t know this and scammers take advantage. Sometimes the company is unaware that upfront charges are illegal. Whatever the case, don’t agree to pay anything until the services you requested are performed.
Not Informed of Legal Rights
A legitimate credit repair company will explain your legal rights in the contract. Signs it may be acting unethically include dissuading you from contacting the credit bureaus, not informing you that you can repair your credit without their services, and leaving out key details in the contract. Don’t accept any services from a company that leaves out pertinent details or evades your questions.
You’re Asked to Sign a Waiver Form
Some fraudulent credit repair companies ask you to sign a form, waiving all your rights under the CROA. However, the law does not recognize this. It will void any waiver of rights you sign. But if a company asks you to sign such a document, move on.
Tells You They Will Remove Accurate Records from Your Report
If you’re asked to dispute information on your credit report, and you know it’s accurate, don’t follow such a request. Any misrepresentation of your information is illegal. Some scammers will go so far as to have you claim identity theft or replace your Social Security number with a credit profile number of Employer Identification Number (EIN). While an EIN is legitimate and often used by businesses, it does not substitute your Social Security number. This whole process is illegal and may be a form of identity theft. You could also be fined or imprisoned for using any number that’s sold to you.
Guaranteeing or promising results is also illegal under the CROA. Improving your credit score, removing all negative credit information, and achieving results over a set time period isn’t definite. There are many factors that influence your credit. And negative details may be there for a reason. You can take steps to improve your credit, but altering your identity or credit history is against the law.
Contact American Credit
Credit repair can be a confusing process. At American Credit, we skip the dispute letter process and take pre-litigation steps that Consumer Credit Law attorneys use. Creditors, when threatened with legal action, will respond to credit bureaus to remove negative items from your report. Request a free, no-obligation consultation by calling us at 800-791-6365.