Credit Repair Scams
A good credit report is one of the most important bargaining tools a consumer can possess. Yet, for a variety of reasons, some people develop a poor credit history. If so, they may become targets for con artists that prey on the consumer’s desperate need for a good credit history by promising to restore their credit.
Many of these con artists call themselves credit repair companies and advertise that they are able to “Erase bad credit! 100% guaranteed” or provide a “Fast and easy way to get rid of bad credit history.” They charge from $50 to $1,000, or more, to “fix” a credit report. Most of the time, companies that promise such appealing offers will simply take your money and do little or nothing to actually repair your credit.
How to protect yourself:
- Realize that there are no easy or quick ways to repair negative, but accurate, credit history. Only time and diligent attention to prompt payment of credit balances can repair it. This is true even if past credit problems were due to illness or unemployment or some other factor beyond your control.
- Be wary of any company that asks for money in advance to restore your credit.
- Before paying any money, contact the Attorney General’s office or the Better Business Bureau to see if any complaints have been lodged against the company.
The Federal Credit Repair Organizations Act prevents a for-profit organization from charging or accepting upfront fees for “credit repair.” The law also mandates that a credit repair organization give you a copy of your “Consumer Credit File Rights Under State and Federal Law.”
It is equally important to know what a credit repair organization cannot do. Organizations are prohibited from making false claims or promises about their services, charging before the promised services have been completed and performing any services until you sign a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees. Ultimately, anything a credit repair organization can do for you legally, you can do for yourself at little or no cost.