Credit Repair Scams
It’s hard to get any kind of loan, including a mortgage, car loan or debt consolidation loan, with bad credit. So-called “credit repair” companies take advantage of this difficulty and the desperation of anyone who has credit problems by claiming to be able to fix bad credit. Unfortunately, their practices don’t work, they are typically illegal and they often leave debtors in a worse situation than before.
How to Spot a Credit Repair Scam
Outrageous claims: If company says they can remove any blemishes from your record, even those that are accurate, they are perpetrating a scam. They’ll either do nothing at all or they will have you actively dispute factual information. That is fraud.
Bait and switch: If a repair service actually has you apply for a new loan, such as a credit card debt consolidation loan, they are just taking advantage of you to earn high interest rates though debt consolidation.
New identity: If the service claims they will give you a “new identity,” what this means is that they will help you obtain an Employer ID Number, which you will use instead of your social security number to obtain new credit. This, too, is credit fraud.
Keeping you in the dark; when a credit repair company does not inform you of what step you can take on your own, that’s a guaranteed sign of a scam. Some “repair” companies actually tell debtors not to deal with credit reporting agencies directly. They are doing anything they can to keep their victims in the dark.
How to Repair Your Own Credit the Right Way
If you have bad credit and can’t get a loan like a mortgage, credit card debt consolidation loan or another line of credit, there are ways to fix it.
Understand the truth: If your credit report reflects bad credit and it is true, then repairing it takes time and effort. There is no “quick fix” when you have defaults, late payments and bankruptcies. The only ways to repair bad credit like this are by changing spending habits, budgeting and paying all bills on time from now on.
Dispute real mistakes: If there are actual mistakes on your credit report, they can be removed and you don’t need help from a “repair company.” Contact the credit reporting bureau in question and notify them of the dispute it writing. Then contact the creditor. Work with both, documenting all correspondence, until the matter is resolved. Whether your bad credit is your fault or a mistake, there’s no fast fix, but it can be repaired on your own.
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