Your credit score reflects your financial health and affects whether you can rent a home or a car. If your credit score shows a red flag, then you must search for a solution, and this is where credit repair services play their role. They help you improve your credit score and repair your credit.
Credit repair services charge a fee for their services. Unfortunately, many of these credit repair services are scams and ruin the reputation of reputable ones.
In this post, we shall discuss the warning signs of a credit repair service scam, what to do when you are scammed, and more.
Credit Repair Service Scam- How to find it out?
If the credit repair service is not following Credit Repair Organizations Act (CROA) standards, then that credit repair service is a scam. The aim of CROA is to protect people from credit repair service scams by giving guidelines for credit repair services to follow.
There are warning signs when you are looking out for a credit repair service, and they include the following:
Making False Promises
If a credit repair service makes a promise that they can remove both accurate and inaccurate information from your credit report, then it is not a good sign.
No one can remove negative credit information from any credit report. It will stay on your credit report for a certain time period and then it will disappear. Knowing what credit repair services can or cannot do under the CROA can help you identify fraudulent services.
Make You Pay Fees in Advance
If the credit repair service is following the CROA standards, then they will not ask the customer for payment in advance. If a company asks you to pay fees in advance, then it is a scam.
Some reputable credit repair services offer a monthly payment plan so that you know the fees before you start employing their services. Conversely, some companies will charge for payment only when they complete their services.
No Proper Explanations on your Rights
Credit repair service scams will not explain your legal rights to you. These rights include:
Get your credit reports for free and look out for errors. You can dispute the errors yourself or choose a legitimate credit repair service for a seamless experience.
In the Fair Credit Reporting Act, there is no need to pay for a service to dispute errors on your credit report.
If you signed up for a credit repair service, then you have the right to cancel your agreement with them. You can cancel your agreement within three business days without paying any charge to them.
Other rights to keep note of include:
- They will not allow you to contact the three major credit bureaus (Experian, Equifax, and TransUnion) directly.
- They will not provide you with the agreement copy for your review.
- They will not provide any clear written documents. They will leave out some information like the date and the name of the service you take.
Leading to Identity Theft
These scammers will lead you to identity theft by misrepresenting your information. Your Employee Identification Number (EIN) or Credit Privacy Number (CPN) falls prey to this theft.
Credit repair service scams may ask you to replace the EIN or CPN with your Social Security Number.
Your credit score gets improved when you add tradelines to your credit reports. You must pay for an authorized user to get their tradelines to appear on your credit report.
This will impact your credit score because you are not aware of the person from whom you are getting the tradelines. It is a scam to get your money.
Steps to Take after Falling for Scam
If you feel that you are fallen for a credit repair service scam, then make a note of these steps:
Register a complaint with the Federal Trade Commission. A common complaint that arises is credit repair counseling.
You must contact the Consumer Financial Protection Bureau (CFPB), the Better Business Bureau (BBB), or the Attorney General’s office in your state to report the problem.
CFPB says that most of the complaints are on credit repair services only.
Can a Credit Repair Service fix your Credit?
A legitimate credit repair service will help you to remove inaccurate items from your credit report.
You can also fix your credit by yourself. But when you hire a legitimate credit repair company, you will find the process easier. Remember these points when you look out for a legitimate credit repair service.
These services convey to the customers the end-to-end process on what sort of process they are working on. They will make sure that the customers are aware of what are the services they are working on.
As the credit repair industry is growing, the instances of credit repair service scams also increase. It is best to be aware of scams and choose a service that works according to the Credit Repair Organization Act (CROA) standards.
When you are in financial trouble, you may reach out to our service, TheCreditPros. We help you in repairing your credit and you can get a free consultation regarding your credit reports and follow CROA standards. You may also follow good credit habits that repair your credit, and we’d be happy to tell you about them.
Frequently Asked Questions
- How fast do credit repair companies work?
Credit repair services will take three to six months to clear your disputes. In case you clear your disputes every year or you have only a few mistakes, it will take no more than one month to repair your credit.
- What can be removed with credit repair?
By approaching a credit repair service, your inaccuracies will get removed permanently. They will contact the credit bureaus on your behalf and get the work done. Some credit repair service scams will make fake promises to fix your credit by removing negative items. But they will not do it.