Individuals who want to fix negative marks off their credit reports often fall prey to credit repair scams. Seeking help from a credit repair service provider who promises a quick fix and new credit identity can actually worsen the financial situation. Other than monetary damage, you will end up wasting a lot of time on useless and unrealistic measures.
How to Spot a Credit Repair Service Scam?
Spotting a fraudulent name of credit restoration companies might be difficult but not impossible. Here are the red flags to watch out for:
The Company Promises to Remove All Negative Marks from the Credit Report
No credit repair company can legally remove accurate information from the credit report. It is only after seven to ten years that accurate negative remarks disappear from the report.
The Company Asks for Payment Before Doing Any Work
A credit repair service provider cannot ask the client for payment until he has done work or research on your file. Never pay a company online and only pay a company after they have provided you a free consultation where they explain their services, how your credit scores are calculated and how their process will work step by step.
The Company Asks for Creation of New Identity
If the company asks you to create a new identity to apply for credit with a different Social Security Number, you need to do a serious background check. Some credit repair companies suggest this particular, unethical way to create a new credit file.
The Company Gives Vague Contracts to Sign
Read the terms and conditions of any contract before signing it. The name and business address of the credit repair company, amount you are paying, start date of service and cancellation procedure must be present in the contract. If this information is not present or if you are asked to sign the contract before giving you a copy to review, this could be a shady deal.
How to Avoid Credit Repair Service Scams
A healthy credit report is the easiest way to avoid credit repair scams. Apart from finding out the faults or incorrect entries in the credit report and suggesting investment and payment ways, there’s nothing more a credit repair expert can do.
Every individual is entitled to receive a free credit report from Equifax, Experian and TransUnion every month. Subscribe for the report, review it and file for any disputes present in the report.
There are two more circumstances under which you are entitled to get a report:
- If your loan or credit card application has been denied by the lender or card company, get in touch with the credit bureau within 60 days of receiving the rejection notice and ask for a credit report.
- If you are unemployed and might get an employment within 60 days, you believe your credit report to contain inaccuracies or you are on welfare, you can ask for the credit report.
It is important for every individual to understand and accept that not every credit restoration company is a scam. But, research well and gather as much information as possible before turning to the credit repair service provider for help.
If you have already been a victim of a credit repair scam, it is important to report the abuse. Contact the local consumer affairs office or the state Attorney General to file a complaint.