How to Spot a Credit Repair Scam
5 ways to spot a disreputable service provider.
There’s nothing worse that taking action to improve your financial outlook and getting scammed. It costs you time and even money – and the thought of losing money when you’re trying to achieve financial success is enough to drive you crazy.
With that in mind, it’s important to know you work with reputable providers whenever you work with any financial service provider. But knowing how to spot a credit repair scam is critical, because there are plenty of disreputable service providers who manage to operate and fly under the radar of organizations like the FTC and CFPB.
The six tips below can help you avoid getting scammed as you look for a reputable credit repair service. And in case it needs to be said, Debt.com thoroughly vets all of the service providers that we connect you with. For credit repair, that means we follow all of the principles below or we won’t refer you. That’s what it means to be a Debt.com-accredited provider. Call us or complete the form to the right to learn more.
Tip No. 1: Reputable companies count success in items removed
The main goal of credit repair is to clean up your credit report in an effort to remove the errors. So a company should understandably count success by the number of items they’ve successfully removed for their clients.
When you’re talking to a company, the rep should be able to tell you how many items they’ve removed, in total, or how many items they remove, on average, for clients they’ve assisted. These are legitimate claims and things the rep should be able to tell you – or that info should be on their website. If they don’t have the answers, you have a right to be concerned.
Tip No. 2: Avoid claims of boosting your score by X-points
Remember that credit repair is about correcting mistakes on your credit reports – credit score improvement is a happy side effect of that process going well. But credit scores are extremely personal, so no company can really guarantee to boost your score.
Think about it – there are a ton of variables that go into calculating the five factors that determine your credit score, so an action that boosts one person’s score X-number of points won’t necessarily do the same thing for your score. It just doesn’t work that way.
So while a company can show case studies and example of work they’ve done for clients in the past and how the score improved in that case, they can’t say they’ll do the exact same thing for you. That means you should avoid companies that make big claims about boosting your score.
Tip No. 3: Look for legal representation
Credit repair involves making legal disputes about mistakes that appear in your credit reports. Since the process is set by law, legal representation is the way you need to go if you want to do things right when choosing a service to use.
That doesn’t mean that you have to have a lawyer to be successful. Credit repair is something you can do on your own. But if you’re going to use a service because you need a knowledgeable professional who can assist you, then attorney representation may be necessary.
Tip No. 4: Legitimate services are usually state-specific
Given what we just said in the tip above, it only follows that you legal representation needs to be licensed in your state. While credit repair law starts at the federal level, state law can also come into play.
What’s the main federal law that governs the repair process?
a) Fair Credit Reporting Act
b) Credit Repair Organizations Act
c) Equal Credit Opportunity Act
d) Fair Debt Collection Practices Act
Tip: The FTC states that CROA, “prohibits untrue or misleading representations” and requires certain disclosures during credit repair service sales. It bars advance payment, requires contracts be in writing with built-in cancellation rights.
b) Credit Repair Organizations Act
So it’s a given that if legal representation is involved at any point during the action to repair your credit, it should be an attorney licensed to practice in your state.
Tip No. 5: Don’t forget to look online
Most credit repair services are found online – it’s just not a service you usually drive to a storefront to secure. And that can be a good thing, since it usually means you can find plenty of information about the companies you look at in the form of reviews and scam alerts.
Fact: The BBB rarely accredits credit repair companies due to concerns of the high instance of fraud in the industry.
Do your due diligence a research the companies you’re looking at for credit repair to make sure they haven’t scammed people before you. It’s easy. Just go to your favorite search engine and type “[company name] reviews” or “[company name] scam.”