When your credit is damaged, it is tempting to believe someone who promises a quick fix. Unfortunately, the credit repair industry attracts scammers who prey on people in vulnerable situations. Knowing the warning signs can save you money and protect your personal information.
Red Flags to Watch For
- Upfront fees. Under federal law in the United States, credit repair companies generally cannot charge you before they have completed the services they promised.
- Guaranteed results. No one can guarantee that accurate negative information will be removed or that your score will rise by a certain number of points.
- Advice to create a “new” credit identity. Using a new employer identification number or a different Social Security number is illegal.
- Telling you to dispute everything. Mass disputes of accurate information are not a legitimate strategy.
- No written contract or explanation of your rights. Legitimate companies must provide a written contract and disclose your rights, including your right to cancel.
- Pressure to act immediately. Scammers often create urgency so you do not have time to think or compare.
- Discouraging you from contacting bureaus or creditors directly.
What You Can Do for Free
Almost everything a credit repair company claims to do, you can do yourself at no cost:
- Get your free credit reports from AnnualCreditReport.com.
- Dispute errors with the credit bureaus and the data furnishers.
- Negotiate directly with creditors and collectors.
- Set up automatic payments and reduce your balances.
- Add positive accounts through secured cards or credit-builder loans.
Better Alternatives
If you need help managing debt, consider a nonprofit credit counseling agency. Look for organizations affiliated with recognized national associations and ask about all fees upfront. A good counselor will review your whole financial picture and may offer a debt management plan.
How to Report a Scam
If you believe you have encountered a fraudulent credit repair offer, you can report it to the Federal Trade Commission, the Consumer Financial Protection Bureau and your state attorney general. Keep copies of all communications and payment records.
The Bottom Line
There is no secret trick to fix credit. Accurate negative information fades with time, and positive habits move your score upward. Be skeptical of promises that sound too good to be true, and protect your personal information carefully.