Lack of jobs and volatile economic conditions post-2008 pushed many US citizens to default on payments, hampering their credit scores. That was the time when agencies claiming to provide immediate solutions to bad credit scores started to surface.
Many agencies, however, toyed with laws and indulged in malpractices such as forgery. Eventually, the Office of Attorney General nabbed these agencies by acting through the Credit Repair Organization Act, 1996. Nevertheless, there still exist many agencies that are nothing but an outright scam.
Having a low credit score has a grave impact on almost all aspects of our life, which explains the omnipresence of the question: ‘how can I improve my credit score?’. Though the anxiety to get the issue addressed can easily lead you to a number of a viable solutions, it is important that you proceed with caution. The promises of a quick fix and 100 percent “guaranteed” credit repair are nothing but tall marketing claims. This, however, doesn’t imply credit repair is a mirage.
How to tell if you are Being Scammed?
In most cases, agencies resorting to unethical means will ask you to create a new identity, which means getting a fake ID. Through the new ID cards, these agencies establish a new credit profile, which is a punishable offense with the penalty ranging from a fine of $500 to up to 7 years in prison. Such agencies may also ask you to apply for new credit with stolen information about someone else, which is also illegal.
In addition, there is a good possibility that you are being scammed if the agency:
- Asks you for payment before the service
- Doesn’t educate you on your legal rights
Where Does The Law Stand?
The Credit Repair Organization Act, 1996 directly prevents the public from any unfair business practices by the credit repairing agencies. The law clearly states that:
- False claims are strictly forbidden
- Payment can be asked only after service
- There has to be a written service agreement
The Right Way Forward
Those who have a bad credit score must not fall for the agencies that claim to provide quick-fix solutions to their problem, as they can do more harm than good. In fact, that is the reason why there is a notable difference between the promises and claims made by agencies indulged in illegitimate means, compared to those made by reliable agencies following the right approach. In all cases, general awareness about credit management can prevent you from such traps.