You have bad credit and you want to make it better quickly and with a low amount of effort. You’re like thousands of other Americans who also have bad credit. Being desperate for better credit can leave you vulnerable to credit repair scams. Don’t let yourself be taken advantage of.
Credit repair organizations are governed by a law known as the Credit Repair Organizations Act. This federal law requires any credit repair service to fulfill certain obligations to you. You should avoid any credit repair service that doesn’t follow these rules.
Seven Signs of a Scam
You could be getting scammed if any of the following are true:
- You aren’t given a copy of the “Consumer Credit File Rights Under State and Federal Law” letting you know your rights to obtain a credit report and dispute inaccurate credit report information.
- You aren’t given a copy of the contract to view before you’re asked to sign it.
- The contract doesn’t contain the following information:
- The amount you are being charged
- Details about the services being performed on your behalf
- The date by which the services will be performed (or the time period required to perform the services)
- The name and business address of the organization
- A statement letting you know you can cancel the contract within 3 days
- You’re asked for payment before the services have been performed
- The company promises to remove accurately reported information from your credit report
- The company promises to create, or asks you to create, a “new” identity with a new social security number or federal employer identification number (EIN)
- You’re asked to sign a form waiving your rights under the CROA
Alternative to Buying Credit Repair
If you’re considering a credit repair service, keep in mind there is legally nothing a credit repair company can do to improve your credit that you can’t do yourself. Many of these companies promise to remove harmful negative information from your report. If the information’s wrong, you have the right to dispute it off your report. You only need to write the credit bureau providing the report. However, when the information is correct, you don’t have the right to dispute it, nor does a credit repair company.
You might not be prosecuted for disputing correct information on your credit report, but you can be prosecuted for fraud if you lie on a credit application. For example, it’s fraud to answer “no” that you have never filed bankruptcy when you actually have. Just because you, or the credit repair organization you hired, disputed the bankruptcy from your credit report doesn’t mean the bankruptcy never existed.
What to Do If You've Been Scammed
Don’t let supposed credit repair organizations get away with scams. Take action if you feel your rights have been violated. Start by reporting the organization to your state attorney general. You can visit the National Association of Attorneys General’s website to find an attorney general in your state. Send a complaint to the Federal Trade Commission and the Better Business Bureau.
Before you use a company’s credit repair services, do some research with the BBB, FTC, and your state attorney general to find out if there are any existing complaints. Avoid companies that consumers have already complained about.