Know the signs of credit repair scams

Today, the FTC announced a court order against a credit repair company that charged consumers advance fees for credit repair services. This has reminded us that credit repair scams are alive and well. The FTC publishes several good consumer guides around credit repair, so does the Consumer Financial Protection Bureau. Here is a summary of the tips, with links to additional documents.

1. There is no quick fix for credit repair

It takes time and effort to repair credit. Credit repair companies promising a “quick fix” should get an automatic red flag from consumers for a cautionary look, because there are no quick fixes. See instead information on how to build a better credit report from the FTC.

2. Don’t pay advance fees for credit repair

Under the Credit Repair Organizations Act, credit repair companies cannot charge you fees in advance for credit repair services. They must complete the services they have promised you, and then they can get paid. So if you are asked for any money before getting your credit repaired, think twice about using the service. Here are FTC’s tips for spotting credit repair scams, and scam-spotting tips from CFPB.

3. You can repair your own credit

Many tools exist to help you repair your own credit. One place to start is to see your credit bureau report, which you can access for free through www.annualcreditreport.com. The FTC’s materials for consumers run down lots of additional options, including how to build a better credit report. 

4. Be alert to the signs of credit repair scams

The FTC lists 5 signs that let you know you are encountering a potential credit repair fraud. Here they are:

If a company:

  • Insists you pay them before they do any work on your behalf,
  • tells you not to contact the credit reporting companies directly,
  • tells you to dispute information in your credit report — even if you know it’s accurate,
  • tells you to give false information on your applications for credit or a loan.
  • doesn’t explain your legal rights when they tell you what they can do for you. (Excerpted from Signs of a Credit Repair Scam, FTC.)

5. If you think you are being scammed, complain!

Laws exist to protect consumers from credit repair scams. If you think you have been scammed, or are worried about being scammed, please call the FTC at 1-877-FTC-HELP or complain online.  Also file a credit reporting complaint to the CFPB. 

 

Helpful documents on credit repair: