Protect yourself from Credit Scams

If your credit is down the drain, you might feel desperate to repair it. Credit effects your ability to borrow money. If you have poor credit, it could disqualify you from buying a home. The marketplace is saturated with companies that promise to repair your credit. If you’re looking for credit repair help, be aware that not all parties promising to repair your credit are legitimate.

Make sure you recognize credit repair schemes before you become a victim. Be suspicious if a company:

  • Insists that you pay upfront before services are provided to you. Under the federal Credit Repair Organizations Act, credit repair companies can’t request or receive payment until they’ve completed the services that they’ve promised.
  • Tells you not to directly contact credit reporting companies.
  • Tells you it can remove most or all of the negative information on your credit report, even if you know that the information is accurate. Only time can remove negative information on your credit report.
  • Tells you to dispute information on your credit report, even if it’s accurate. This is illegal and some companies use untruthful tactics to carry out this process, such as having you claim identity theft to have the information removed.
  • Tells you to give false credit information on credit or loan applications. This is also illegal and considered fraud.
  • Does not give you a copy of the Consumer Credit File Rights Under State and Federal Law letting you know your rights to obtain a credit report and dispute credit report information that is not accurate.
  • Suggests that you try to invent a new credit identity with a new social security number or federal employer identification number. If you use a social security number or federal employer identification number that is not your own, it is considered fraud.

Under the Credit Repair Organization Act (CROA), it is illegal for credit repair companies to lie about what services they can provide you, and charge you before they have performed services.

According to the act, credit repair companies must explain:

  • Your legal rights in a written contract
  • A written contract explaining the services they’ll perform
  • How long it will take to see results
  • What you will pay
  • Any guarantees

Keep in mind that accurate negative information stays on your report for seven years. Bankruptcies are reported for 10 years, and criminal information can stay on forever. No credit repair company or credit counselor can get rid of it. However, if there is incorrect information on your credit report it can be fixed. You can either dispute incorrect information for yourself or hire someone to do it for you.

If you decided to hire someone to help you with your credit, make sure you avoid scams by using the above advice. If you’re looking for a home loan, but are unsure of your ability to obtain one because of your credit, reach out to a loan officer.