When people have bad credit, they usually want to make it better as quickly and easily as possible. However, in their desperation to resolve their credit issues they may leave themselves vulnerable and at risk of being taken advantage of by credit repair scams.

Signs of a Credit Repair Scam

One of the biggest signs you may be the victim of a scam is if the company does not provide you with a copy of the Consumer Credit File Rights law. This informs you of your right to obtain a copy of your credit report as well as information on how to dispute any inaccurate information on it. If you have trouble getting a name and business address for the organization as well as an estimated time for completing requested services, it is probably a scam.

How it Works

Credit repair scams promise to remove your bad credit history. This usually involves them filing a dispute with your creditors. If the information is correct, it will not be removed no matter who requests it. If the information on your file is incorrect, you can apply to have this removed yourself without paying a company. Other credit scam companies may offer you a brand new credit file, which usually involves using someone else’s credit. This is fraud and does not work.

Crackdown

Some credit repair scams may request a large upfront payment before they begin working on your credit. In the past, companies have taken the payments, closed the business and changed their name. This leaves their clients out of pocket, and their credit files remain untouched. Regulators are now cracking down on these fraudulent companies with the Illegal Credit Repair Organizations Act setting strict standards.

Avoiding the Credit Repair Scams

Educating yourself on the strict laws that govern the credit repair industry is a good way to avoid falling victim to a scam. Any company that requires any sort of upfront payment, makes guarantees to increase your credit score quickly or offers you a brand new credit file should be avoided. If you are considering using a reputable credit repair company, you should seek the advice of a credit counselor first.

Clean Your Own File

Everybody has the right to request a copy of their credit file to ensure information held on it is correct. If you are struggling to pay your bills, you can ask the credit bureau to attach an explanation to your file for future potential creditors.