Few people are as vulnerable to scams as people who have credit problems. After all, bad credit makes it hard to get a loan, an insurance policy, or even certain jobs. It’s only natural to want to do something – anything – that will improve both your credit report and your credit score. But the problem is that thinking that way can set you up for credit repair scams. Not only will they not help your situation, but they can actually make it a lot worse.
How can you tell if a credit repair service is a potential credit repair scam?
Does the company actually exist?
You should always do some basic research on any company you are going to do business with, but especially those that are not exactly household names. If a credit repair service is nothing more than a website, an email contact, or even a voice on the phone (but not all three), your scan radar should be up.
Here are some facts you should look to verify before doing business with any credit repair service:
- Do they have a physical address? You should be able to verify this using Google Maps. If the company doesn’t show up at the given address, or if it is under a different name, it’s probably a scam.
- Do they have a telephone number – and does someone actually answer when you call? If there is no phone number, or no 800-number, or you get either an answering service or an unprofessional response, it’s probably a scam.
- Are they listed with third-party sources, such as the Better Business Bureau? And if they are, what kind of rating do they have with that agency?
No listing, or a bad rating, raises the possibility of a scam considerably.
- Is your only contact with them by phone, by email, or by regular mail? A legitimate business will offer contact by all three methods. If you can only reach them in one way, there’s a very good chance that it is a scam. A legitimate business wants to be accessible, as scam operation doesn’t.
One other method that you could use to check to see if the service is a scam is if you simply do a web search, entering “ABC Credit Repair Scam”. If entries turn up indicating that people have been scammed by the service, that will be a sign to you not to move forward with them.
Services that Make You Pay Before They Do Anything
The scam alarm should be ringing loudly on this one. A service that is asking you to pay money upfront, particularly a large amount, before they even do anything is probably not legitimate. They are simply looking to collect a large fee, after which you probably will not hear anything from them.
At the same time, be careful of any credit repair service that insists that you pay by cash. Though they may present the requirement as being the result of dealing with people with poor credit, closer to the truth is that they are looking to receive untraceable payments. Once you send cash, there is no way that you will be able to track down who you sent it to, let alone that you even made the payment at all.
Be careful as well about providing credit card information until you have verified that the company is legitimate, and you have a written contract spelling out the services that they will provide. Simply providing your credit card number on a website or to someone on the phone could be participating in a phishing scheme in which the only purpose is for the other party to get critical information from you that they can then use in perpetrating identity theft.
Services That Sound Too Good to Be True
The old rule of thumb applies completely when it comes to credit repair services – if it sounds too good to be true, it probably is. Never trust promises to give you AAA credit, especially if they tell you that it can happen in just a few months. No legitimate credit repair service can take you from poor credit to excellent credit in a matter of months.
Given that it can take 7 to 10 years for derogatory credit to fall off your credit report, any claims of making bad credit go away quickly are completely bogus. The credit reporting system is simply not set up that way.
Along the same line, you can bet that the service is a scam if it in any way indicates that they know of some sort of “secret method” to improve your credit and credit scores. There are hundreds of articles written all across the World Wide Web that explain what is involved in improving your credit. It should be obvious that there simply are no shortcuts in the process. Promises that there are, should be viewed as an immediate tip off that you are about to be scammed.
Services Promising You a New Credit Identity
Unless you are in the Federal witness protection program, no one can give you a new identity. And no one can give you a new identity just for credit purposes alone. You should also know that even taking such a step is completely illegal. That means that any credit repair service that advocates a new identity or suggests that you use a different tax ID number is leading you into a complete fraud.
Be warned: if you willingly participate in an effort to create a new identity for yourself you will be committing a crime.
Unfortunately, this kind of scam is hardly unusual. People with bad credit will sometimes willingly fall for it. But more specifically, anyone who advocates such a strategy is already operating outside the law. Such an individual or organization would likely have very little hesitation in recommending that you join them in the scam. After all, they stand to gain a fee from you, after which they will somehow disappear from the planet, leaving you to face the legal consequences.
Services That Have You Dispute Credit Report Information Even If It’s Accurate
This is actually one of the more common scams floating around. A company has you dispute legitimate information on your credit report, which puts bad credit items into suspension with the credit bureaus while they investigate the claims. Those suspensions create a temporary improvement in your credit score, making you think that the credit repair service is actually getting the job done. As a result, you are more likely to send them payment for their advice as well as for the promise of future credit improvement strategies.
But once again, the improvement in your credit score is only temporary. Once it becomes obvious to the credit bureaus that your disputes are bogus, the negative credit information will be returned to your credit report, dropping your credit score down once again.
Get With the Right Credit Repair Firm
With all of the credit repair scams going on out there, how can you find a legitimate credit repair service to help you with your credit problems? There are actually a few good and legitimate firms that can help you.
Follow the steps listed above to determine if the credit repair service is legitimate. Get referrals from other people you know who have used credit repair services. You should also plan to work with a credit repair service that is also a law firm. This is because not only do law firms have certain standards that they are legally required to follow, but also since they have knowledge of credit law, they are in a better position to help you to legitimately improve your credit situation.
Lexington Law is an example of such a firm but there are others. I suggest that you work with a well-regarded law firm and one that has a long history of working with clients in the area of credit repair, and if necessary, with bankruptcy.
If you’re going to use a credit repair service, the strength of the firm that you are working with will be the difference between success and failure. Choose wisely!