The ultimate slap in the face to someone with a poor credit score is to have yet another financial setback.Â This is one reason why credit repair scammers are such a cancer in the credit world. They promise the world to people who are desperate for a good credit score and at the least, leave them lighter in the wallet with zero improvement to their credit. And at worse, they can hurt people’s credit score, get them sued by creditors, or even get them in trouble with the law.
Credit repair scammers also have the effect of damaging the reputation of the credit repair industry as a whole leading consumers, companies, and officials to doubt even the most reputable of credit repair companies, many of which have been in business for a decade or more and combined have helped millions of people legally repair their credit scores. And perhaps this is the worst thing about credit repair scams; they keep people who could truly benefit from the services of a credit repair professional from giving them a try. For every person who does get victimized by a credit repair scam, there may be dozens more who have avoided all credit repair companies because of the fear of being taken.
But this does not have to be the case. There are things you can look for to detect a credit repair scam and by being aware of what to watch out for, you can weed out the shady companies and find a credit repair company you can trust.
Here are four tell-tale warning signs of a credit repair scam:
Offer to Create a New Credit Report
This gets pitched as the ultimate way to get rid of bad credit. Instead of trying to clean up your existing credit reports, these scammers claim to be able to help you get a brand new credit report. And while they may be able to do so by tricking the credit bureaus to generate a new report using a fake Social Security number, having that new credit report will not solve your credit problems. Not only will you still have poor credit (no credit does not equal good credit), but if you attempt to use your new credit report to get a loan or other line of credit, you are breaking the law. You could end up with the same poor credit score plus a criminal record.
Require a Large Upfront Payment
Thieves want to get your money and get away. They’ll break your car window, grab the stereo and run. They’ll come through your back door, head straight for the jewelry and get out of the house before anyone is the wiser. Credit repair scammers can be the same way. They’ll take all the money upfront, often times many hundreds or thousands of dollars, and while they may pretend for a while to be doing something to help you, they already have what they want and are merely covering their tracks. Any company that requires you to pay hundreds of dollars before they will do anything for you should be avoided.
You have a right to know what a credit repair company is going to do for you, how much it will cost, and when you will be expected to pay. You also have a right to know all the fine print surrounding any guarantees and to know exactly what the cancellation procedure is. And because of this, the Credit Repair Organizations Act requires that credit repair companies provide you with a written contract that must be signed before any credit repair work can begin. Simply put, if a company does not have a contract, they should not have your business.
Cash Transactions Only
What better way to get away with a con than to make sure you get all your profits in cash? There’s no paper trail and no method for charge backs. Once you have the money, it is up to the other person to prove not only that you acquired it fraudulently, but they also have to prove exactly how much you have taken. And for a few hundred dollars, most of the time, it simply isn’t worth the work which is a perfect situation for a credit repair scammer. These days, unless you are the neighborhood lawnmower, just about every legitimate company accepts credit. Be very skeptical of any credit repair company that does not.