6 Red Flags of a Credit Repair Scam
Posted on January 18, 2011
With an increased focus for consumers on repairing their credit, it makes sense that there are increased efforts on behalf of less-than-reputable ‘credit repair’ companies to market their services to unsuspecting consumers.
The Sad Reality
So many people have suffered through debt and other financial problems that led to a poor credit rating, the national economy felt the punch, especially in light of the housing market crisis. Since the attention on the importance of good credit scores has been steady, more consumers finally feel ready to take their debt to task and finally do something about repairing their credit. There is no longer the deep stigma associated with debt there was in year’s past.
While it is a good sign more consumers are paying attention to their personal finances, it is also creating a vulnerable position for many who are not sure where to start or if they are up to handling the task at hand. They still fear debt negotiations with their creditors or are in need of a ‘quick fix’ to pursue more financing. Both scenarios have paved the way for a so-called credit repair company to easily come to the rescue.
The sad reality is that while many consumers have the best intentions, not all agencies feel likewise. Many are in it for the cash and do not think much about the damage they are causing to consumers when the money is gone but no legitimate credit repair work is done on their behalf. Scam agencies are increasing all the time, promoting credit repair services that are essentially impossible. They make it sound so easy in their aggressive advertising campaigns and many consumers take the bait.
What Happens Next?
After a consumer falls for the promotional tactics promising them guaranteed results on their credit repair journey, many consumers must pay out cash up front to an agency who either does nothing further the help fix their credit or how uses illegal tactics for establishing new credit identities.
How Do You Know?
There are some very specific elements of an agencies service promises that can be a definite red flag for consumers. While many agencies are very good at raising the bar on conning consumers, the majority of scams will always have at least red flag that indicates things may not be on the up and up.
The Six Red Flags
- The company demands upfront payment for services before they are rendered. The law under the Credit Repair Organizations Act requires that an company completed promised services before they are allow to collect payment.
- The company representative is elusive or vague about answer questions concerning your rights.
- The company does not endorse your requesting your own credit reports or your score for your own personal review. They also do not advice that you can speak directly with your creditors and do other tasks on your own for free to repair your credit.
- The company will lead you to believe or tell you directly that they will be able to erase most of the negative credit details listed in your credit report, even if the current data is correct.
- The company has you dispute all information listed on your credit report as inaccurate in an effort to get many of the entries dropped from your report.
The company persuades you to sign up for a new identification number. Some agencies instruct their clients to sign up for an Employer Identification Number which will be used in place of your Social Security number, thus appearing the client has a clean slate.
- What Is File Segregation? The Reality of a Credit Repair Scam
- Credit Repair Services – Consider the Fine Print
- Why Credit Repair Companies Have Such a Bad Reputation
- What Should Be In a Credit Repair Contract?
- Laws to Know During Credit Repair and Beyond