Credit repair scams

Credit Repair: Protect Yourself from Scams

If you have poor or damaged credit and are considering credit repair services, it’s crucial to distinguish between legitimate companies and credit repair scams. While there are reputable firms that can help improve your credit, scams exist, aiming to exploit unsuspecting consumers. This guide outlines five signs of a credit repair scam and provides insights into common credit repair scams.

Five Signs of a Credit Repair Scam

1. Guaranteed Results:

Scammers may promise improvements to your credit score, fixed results within a specific time, or the removal of all negative items, even if accurate. Legitimate companies cannot guarantee such outcomes.

2. Misrepresentation Requests:

Unethical companies might ask you to misrepresent information, such as using an Employer Identification Number (EIN) or claiming identity theft falsely.

3. Claim of a New Identity:

Scammers may falsely promise a new identity, offering a new EIN or Credit Privacy Number (CPN). Legitimate companies do not engage in such practices.

4. Failure to Explain Legal Rights:

Legitimate credit repair companies should clearly explain your legal rights, including the right to contact credit bureaus, review contracts before signing, and the ability to repair your credit independently.

5. Upfront Payment Requests:

The Credit Repair Organizations Act (CROA) prohibits upfront payment requests from credit repair companies. Scammers may demand a large upfront payment, violating legal requirements.

Common Credit Repair Scams

1. File Segregation Schemes:

Offering an EIN to replace a Social Security number is illegal. Consumers obtaining or using an EIN for credit applications are engaging in an unlawful practice.

2. Tradeline Renting:

Paying for authorized user status (tradeline renting) to boost your credit score is not illegal but can lead to potential issues. It’s safer to add a loved one as an authorized user rather than paying a stranger.

3. Credit Privacy Numbers (CPN):

CPNs, created by scammers to replace Social Security numbers, are considered fake and can involve identity theft. Using a CPN is not a legitimate or legal practice.

What to Do If You Are Scammed

If you realize you’ve fallen victim to a credit repair scam:

1. Report the organization to your state attorney general.
2. File a complaint with the Federal Trade Commission (FTC) and the Better Business Bureau.
3. Consult with an attorney for potential legal action.

How to Identify a Legitimate Credit Repair Company

Ensure a credit repair company is legitimate by:

1. No Guarantee of Specific Results:

Legitimate companies do not guarantee specific outcomes or timeframes. They focus on delivering services and improving your credit profile.

2. Customized Repair Strategy:

Legitimate firms tailor their approach based on your unique credit situation, recognizing that each individual’s credit history is different.

3. Transparent Communication:

A trustworthy company maintains open communication, keeping you informed of progress through scheduled calls, emails, or other means.

4. Explanation of Legal Rights:

Legitimate companies provide documents explaining your right to repair your credit independently and offer a detailed contract of services.

5. Realistic Claims:

Legitimate companies make realistic claims about their services, such as access to credit monitoring tools or letters delivered on your behalf.

Safely Repair Your Credit

While you can dispute inaccurate information and make timely payments on your own, a professional credit repair firm like Lexington Law can streamline the process. Lexington Law adheres to CROA, providing clients with over a decade of expertise in challenging unfair, inaccurate, and unsubstantiated information. Sign up for a free, personalized credit assessment today.