If you’re seeking information about ways to repair a bad credit score, a credit repair company might seem like the ideal solution for you. Their goal is to help you fix some of the bad information showing on your credit report and replace it with more positive information, resulting in an improved credit score.
There are some companies available that will happily help you fix your credit problems. What you may not realize is that there are also plenty of credit repair scams out there taking advantage of vulnerable people.
How to Avoid Credit Repair Scams
Before you jump at an offer to repair your bad credit, take a bit of time to look for some warning signs that could indicate you’re walking into a scam. Common warning signs include:
- Asking for money up front: any credit repair company that asks you to pay money upfront before providing any service is a scam. Under the Credit Repair Organizations Act (CROA), it’s not legal for the company to ask for money until after the service is completed.
- Not informing you of your rights: it’s common for many scam companies to avoid telling you your rights when it comes to fixing bad credit. Under the CROA, you have the right to view the services being offered and the full fees being charged before you proceed. You also have the right to cancel your contract within three days without any charges being applied, if you change your mind.
- Not providing a contract: always be sure you receive a copy of a contract before agreeing to pay for any services. It’s common for some companies to expect clients to sign a contract, but not offer the client a copy of the completed contract.
- Invalid or missing information on the contract: if you do receive a contract to sign, take the time to read it carefully. Be sure that it includes a full amount you’re being charged and an itemized listing of the services that will be conducted.
- Asking you to waive your rights: some companies will ask you to sign a form that waives your rights under the CROA.
- Creating ‘new’ identities: there are companies out there promising to create a brand new credit identity so you get a fresh start on your credit history. For those people whose credit has been severely affected, the idea of a new credit history can sound like a great idea. However, it is illegal for you to use any other Social Security number than your own to get credit, so you could be charged with hefty fines or prison time. Many companies also sell illegal Social Security numbers, so you have no idea where the ‘new’ identity you’ve paid for came from.
It’s unfair to say that all credit repair companies are scams. Some of them provide a legally valid service designed to help people with impaired credit. Before you rush to sign up with a credit repair company, take a bit of time to look at your options and be sure you’re not signing up with a scam.
There are some things you can do on your own for free that can help improve your credit rating. Order a copy of your credit report and check that the information on it is correct. Work on catching up any past due bills and make payment arrangements with your creditors.
When you’ve exhausted the options you can complete yourself, it’s time to start looking for a reputable credit repair company that really will provide an honest service.
Your Credit Rights
Not all credit repair companies are scams. Knowing the warning signs to avoid can help to ensure you’re dealing with a reputable company. Unfortunately, many of the scammers are working harder than ever to cover their tracks and hide any obvious warning signs you might be looking for.
Before you do sign up with any credit repair services, be sure you receive the following information:
- A copy of your full legal rights written into a contract agreement.
- A copy of the contract containing a detailed list of services the company will provide and the length of time it will take to get the results they’ve promised.
- An explanation of your three day right to cancel your contract with no questions asked and with no charges.
- The full schedule of fees and charges.
If your credit score has been affected by wrongful information or you’ve already been scammed, you can choose to seek advice from an attorney at Powers McCartan PLLC or visit the National Association of Attorneys General to find an attorney in your state. It may be possible to have some issues resolved quickly and easily during a free consultation.
If the credit repair company you hired to fix your bad credit problems turns out to be a scam, you may also need an attorney to help you sue that company in court for any losses you incurred. In some cases, you may be able to sue for punitive damages as well.
Credit repair companies really are able to help you fix bad credit problems. The key is to be absolutely sure you’re working with a legal and reputable company before you sign anything.
Amber Porter writes articles focused on money and finances, whether she’s writing about where to save extra money each week, or how to check and build up your credit score.