All About Credit Repair Scams (I mean Companies)

If you are considering hiring a company to repair your credit, you should first be aware of the various credit repair scams that are out there. Some people innocently go to a company who promises to clean up their credit, and instead of getting a good credit report, they end up losing a lot of their money—and they still have bad credit.

So, what can you do to insure that you don't fall victim to one of these scams? Start by educating yourself about the types of scams that are out there. Do you want a few warning signs that differentiate a credit repair company and a scam? Read the following tips below and don't fall victim to a scam!

You Know it's a Scam if...

They claim they can remove true items from you credit report

First of all, a reputable credit repair company will never claim that they can remove true items from your credit report. For example, most legitimate items will stay on your credit report for seven years (bankruptcies stay on for ten years), and there is simply no real way to remove them. But a scam operation will tell you that it can be done.

They don't give you a detailed contract

A reputable company is required to give you a detailed contract, outlining all of your rights dictated by Federal law. In addition, they are required by law to accept any cancellation attempt made by you within three days of the contract. On the other hand, someone operating a scam will try and get all of your money up-front, and be vague about their obligations.

They offer the opportunity for a "new credit identity"

Another scam to watch for is file segregation. In this type of scam, a company will tell you that they can give you a new credit identity—the problem is that their methods are illegal. Here's how it works. A person receives an email telling them that they can get a brand new credit identity by contact the sending company. Once contacted, they will ask the person to apply for a tax identification number (which has the same number of digits as a social security number) and then use that number to apply for credit.

The problem with this scam is that it is illegal and could get you in a lot of trouble. A reputable company will never tell you that they can give you a new credit report or identity, because it is impossible without committing an illegal act. Beware of any company that sends you an email about your credit report. Read our article on new credit identities for more information.

They claim to be the only ones who can help

Finally, be cautious of anyone who claims that they are the only ones who can repair your credit. In reality, you can take the steps that you need to in order to repair your credit legally and it's not necessary to hire someone to do it for you. In some instances, it's a good idea, but the point is, anyone who tells you that it's necessary is probably running a scam.

In short, credit scams are everywhere and, as a consumer, you must be cautious. Make sure that the company that you work with is legitimate.

Summary

It is critical to know the tell-tale signs of a credit repair company scam before you seek out help
Real credit repair companies cannot remove real items from your credit report
Real credit repair companies will give you a detailed contract outlining their exact obligations
Real credit repair companies cannot offer a "new credit identity"
You can do everything a real credit repair company can do for yourself

Now that you've got the basics down, it's time to get to work and start the process of repairing your credit. Before you do anything you will need your credit report, so head over to our article on How to Get a Credit Report.