Suspicious of all those credit repair ads floating around? You should be. The credit repair industry can be a bit of a minefield and it’s really be tough to sort out the good through the bad.
Credit repair companies possess gotten a bad reputation lately, plus rightly so in some ways. Complaints towards the FTC and BBB have risen dramatically over the years and there’s no sign of it slowing down.
The safest action to take is simply work on doing your own credit score repair. Although let’s face it, not everyone has the time or inclination to be persistent and diligent enough to follow through. There’s nothing wrong with that, but it’s important to tread carefully if you choose to hire some help.
Here’s five big red warning signs to watch out for so you can avoid getting scammed by a bad credit repair service:
1 . Large Up Front Fee
One sure fire indication of a credit repair scam is definitely charging a hefty up front support fee before any services are actually performed. Most credit repair frauds will typically ask for $1000’s beforehand before doing anything, which violates the Credit Repair Organizations Action (CROA).
This is not to be confused with a typical “set up fee” that most credit repair companies charge. However , even a set up fee cannot be billed until your case setup and initial consultation service has been completed.
The main point is, if you’re questioned to pay immediately before anything is done at all, that’s a red flag you’re possibly being ripped off. If you’re asked for credit cards number, make sure you see clear information regarding when and under what conditions it will be charged.
2 . Not Revealing Your Rights
Section 405 from the CROA requires a credit repair firm to provide you with a rights disclosure prior to any agreement or contract is signed. This disclosure includes things such as your right to directly contact credit reporting agencies to dispute inaccurate info, your right to obtain copies of the credit report, your right to sue a credit repair company who violates the CROA. It also includes your own right to cancel the agreement within 3 days for any reason (some states may require more than 3 days).
The language of your CROA section 405 rights is very specific, and may end up being viewed on the FTC website so you can compare and make sure it lines up with any disclosure language they provide you.
Any credit repair organization who fails to provide you with that exact language or doesn’t provide it at all, should be avoided and is possibly a scam. At the very least, by not giving it they are violating the CROA.
3. Promising to Get You a “New” Credit File
Run for the hills in the event that any credit repair service even hints at getting you a brand new credit report. Offering any such thing is further than misleading, it’s downright illegal.
New credit files do sometimes get mistakenly created at the credit bureaus, and several credit repair scams will take advantage of the system to try and intentionally force a new file to be created. Again, this is illegal.
Other credit repair scams will use fraudulent techniques to obtain a new social security number and/or a new identity.
Steer clear if there’s even a subtle sign of a giving you a completely clean standing or new credit file.
4. Misleading Performance Guarantees
A credit repair company can certainly stand behind their solutions with a money back satisfaction guarantee. Nevertheless , making a firm promise of a certain outcome or point increase in your score simply can’t be done. There are a lot of factors out of their control plus out of your control to promise a certain result with absolute certainty. Any kind of statements about typical or target outcomes should at least leave open the possibility that it may not happen despite their finest efforts.
5. Implying They Can Get rid of ALL Negative Information, Even If Is actually Accurate
A credit repair service can only promise to help you try and remove inaccurate information from your credit report. To express or imply they can remove just about all negative items, regardless of it’s precision, is another big sign of a scam.
There’s a distinction to be made here though. Many credit reports are full of inaccuracies by the sloppiness of the credit agencies and creditors, so there may be harming inaccuracies that most consumers aren’t aware of. For example , if you had a charge off and it’s on your credit report, it’s simple presence doesn’t make it accurate.
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Actually seemingly small inaccuracies may be damaging and can always be disputed. However , intentionally disputing an entry that’s considered to be 100% accurate is not allowed.