How to Spot a Credit Repair Scam

This article includes tips on how to guard against a credit repair scam and protect yourself from becoming a victim.

You’ve probably seen ads from companies that claim they can repair your poor credit score at the blink of an eye. How great would that be? You’d finally get to lower your insurance premiums, or apply for the business loan you wanted. Your bad credit history would no longer raise the red flag whenever a potential lender performed a credit check on you. Sadly, credit repair doesn’t work that way.

 There is no quick fix that will magically eliminate bankruptcies, foreclosures, and other negative items from your history. In fact, you can’t modify these items for a period of up to ten years.

All you can do is look for inaccuracies in your credit report and correct them. Therefore, anyone who claims that he is going to delete entries from your credit history is blatantly lying.

Another favorite claim of bogus companies looking to scam desperate people out of their money is the promise of a brand new credit report. While the prospect of starting over with a clean slate may sound tempting, it's also illegal.

Using an Employer Identification Number as a substitute for your Social Security Number (SSN), or using someone else’s SSN, which is what these companies typicallydo, will get you in serious trouble. Identity theft is not to be taken lightly, and you will not be spared as the victim of a credit repair scam.

When you hire a credit repair company, you sign a contract that states the services you are going to receive, their cost, and an estimated time of delivery.

Make sure you review the contract carefully before signing to see whether this information is in accordance with the representative’s claims.

Even if you sign the agreement, you still have three days to cancel the contract, so there’s plenty of time to have your lawyer check it.

Any company that doesn’t take particular interest in explaining your rights and discussing possible action plans with you is not to be trusted. “Let us handle it” is not an acceptable answer. You need to be kept in the loop.

Upfront payments are highly suspicious and indicative of a credit repair scam. If a company requests to be paid before the terms of the contract are fulfilled, you are very likely dealing with scammers who will take your money and run.

You can’t expect a credit repair company to work miracles for your poor credit score. Whether you choose to take action on your own, or hire a company to do it for you, you are in for a lengthy and complicated process.

Always be wary of ads or company representatives trying to convince you that there is an easy way out.

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