Warning Signs of a Credit Repair Scam

There are a lot of good credit repair companies out there that help people improve their credit score by disputing negative items on their credit reports, helping optimizing their current credit accounts, and providing information about adding positive credit.

But on the opposite end of the spectrum, there are some credit repair scammers out there looking to take advantage of people who are desperate for a better credit score. Here are the top ten warning signs of a credit repair scam so if you are in the market for credit repair services, you will be better equipped to tell the difference between a legitimate credit repair service and one that is just out to victimize you.

The Top Ten

1 Large upfront payment

I just spoke with Parkview Legal who put my credit score at more than 100 points less than what I have. I had to pay them $60 to pull my credit report, of which they promised me a copy. I never received my copy. They used this low credit score to tell me how horrible my credit report was and how only they could fix it for $500 to start and $89.95 per month; and it would only take 12-18 months. That is over $2000. When I decided not to go forward, they badgered me and told "I was looking for an easy way out." I told them I was a single mom more worried about buying groceries than a $60 credit report (which I still do not have). Only after I insisted that I would not use their services, was I able to get off the phone, with a promise that I would have my copy of my credit report within 5 minutes. Again, I still do not have my alleged credit report and have had $60 taken for nothing. Do NOT trust these people. They are very considerate and friendly, but it is just a trick!

A common trademark of a credit repair scam is to con you into paying all the money right away so that by the time you realize you are being taken for a ride, they already have what they want. This is why the federal Credit Repair Organizations Act actually forbids credit repair companies from accepting payment for a service before it has been performed. So if someone wants a bunch of money before they will even start working on your credit, run the other way.

So far, dealing with Park View Legal/Law, the free consultation cost $59.95. Without looking at my history, another $199.99 was asked with promise that original money would be added to the total. Then, another installment was to be deducted from SSD check of $175.

Funny you say that they can't remove a thing. They have disputed resulting in removals of hundreds of thousands of items.

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2 Claims to be able to create a new credit report

So, your credit is so messed up you think there is no way you can get a loan. Maybe you filed for bankruptcy or maybe your home was repossessed. Some credit repair scammers will claim to have the perfect solution for you. They say they can trick the credit bureaus into creating a brand new credit report with none of that bad stuff on it. And they may even be able to do it. But here's the kicker and the thing they certainly won't tell you - it's illegal. You may have a new credit report, but if you try to use it you could end up in jail.

3 Claims to know a secret loophole

Ask anyone who knows anything about credit repair and they will all tell you the same thing, there is nothing a credit repair company can do for you that you cannot do yourself. The only reason people use a credit repair company is that they don't want to do the work themselves. Anyone who tells you they have some super secret system that nobody else knows about (secret computer program, contacts within the credit bureaus, knowledge of a hidden backdoor, etc.), is lying to you face. A credit repair company may have more experience and may be better at performing credit repair than you are, but if they say they can do something you can't, don't believe them

4 Only accepts cash

What better way to scam someone than to force them to make an untraceable, unreverseable cash payment. It's amazing how many people get suckered by a credit repair scammer who posts signs by the side of the road and then meets you in a parking lot to get your cash payment. At any other time, you'd know better so don't let your desperation for a good credit score cloud your judgement.

5 Doesn't have a physical address

Any reputable credit repair company is going to have a physical location where the work to repair your credit is performed, even if it is just someone's home. If you find a credit repair company that doesn't, or isn't willing to tell you what it is, assume they have something to hide.

6 Won't tell you what they do

It's your credit report so you should know exactly what is being done to fix it. If a credit repair company isn't willing to tell you how their credit repair service works or seems to be avoiding your questions, be wary. If a credit repair company responds to your questions with "just trust us", don't.

7 Promises to delete bad credit

This is a little bit if a grey area because a lot of credit repair companies have refund policies where if they don't delete a certain number of negative items from your credit reports. you can your money back. But what you have to be careful of is a credit repair company that promises to be able to delete a bankruptcy, collection, late payment, repossession, etc. regardless of whether or not that listing is correct. The truth is that no credit repair company knows for sure whether or not they can delete something from your credit report because it is up to the credit bureaus whether or not something gets removed. They can do everything in their power and even start filing lawsuits, but even then, they may not win.

8 Doesn't inform you of your rights

You can repair your credit on your own. Anything a credit repair company can do for you, you can do yourself. Watch out for any credit repair company who claims otherwise.

9 Contacts you after you file for bankruptcy

When you file for bankruptcy, it becomes public record. Credit repair scammers monitor these records and try to get people when they are at this low point in their lives. They'll tell you that there is no way you can get credit for 10 years because of the bankruptcy on your credit report and then they will claim to be able to delete the bankruptcy or get you a new credit report. Don't believe them. They're just trying to take money from people who can't afford to lose it.

10 Doesn't have a contract

Federal law requires that you have a signed contract in place stating specific things like the credit repair services that will be performed, the fees that will be charged for these services, and when these fees will be considered collectible. You also have the right to cancel this contract within three days of signing it and with zero financial obligation. Before you sign up for any credit repair service, make sure you get everything in writing.

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