Desperately searching for a way to quickly boost your credit score is common after trying for weeks or months to amend past financial mistakes. Enter credit repair scams, or advertisements, claiming to erase bad credit, legally create a new credit identity, and remove bankruptcies, liens, and judgments from your credit history. Engaging with one of these illegitimate ads will not only waste your time and money and do nothing for your credit score, but could lead to being charged and prosecuted for misrepresenting your Social Security number or getting an Employer Identification Number (EIN) under false pretenses — which are federal offenses.
To help ensure your funds and information remain secure, let’s take a look at the warning signs of credit repair scams:
- Secrecy: Most scammers will advise you to avoid contact with the three prominent U.S. credit reporting agencies: TransUnion, Equifax, and Experian. This is a clear sign of a scam — walk away!
- Large Payments: The repair company will likely ask for a large amount of money up front, before even seeing your current credit report or score. A legitimate organization will typically not request money up front.
- False Promises: Scammers will promise that they can remove or amend anything on your credit report including recent, accurate delinquencies — and fast. It is important to understand that legitimately improving your creditworthiness does not happen overnight and rather takes a continued, conscious effort and debt repayment plan. And even then, not everything can be expunged from your record.
- Sneaky Methods: Most false repair companies urge you to apply for and use an EIN in place of your Social Security number, so you can clear your credit history and start over. Also, they may ask you to dispute current, accurate information on your credit report. These are federal crimes, which could be prosecuted if you concede, even if you are unaware of the crime being committed.
Falling for a credit repair scam can land you in even hotter water than when you started. The good news is that you can legally dispute any old or inaccurate information on your credit report yourself. It may take some time, but it’s better to be safe than sorry. Read “Habits to help and hurt your credit score” to learn the dos and don’ts of building credit before it’s too late.
To report credit repair fraud, contact your state attorney general, file a complaint online with the Federal Trade Commission, or call 1-877-FTC-HELP.