As consumers, we must always be on the lookout for scams and too-good-to-be-true offers and deals. There are far too many disreputable companies preying on vulnerable consumers—those without the resources to protect themselves. One service that is ripe for ripping off consumers is the credit repair industry. Being aware of how these companies scam consumers could prevent you from becoming a victim.
Repairing Bad Credit
If you have a bad credit rating due to past unpaid debt, a poor credit card payment history, or a bad marriage, you can repair your credit, but the only sure way to do this is with time and a debt repayment plan—which cost nothing. There are credit repair services available that are happy to charge you to do the same thing. While their offers of a fresh start may be tempting, if they engage in the following activities, they should not be trusted:
Charge you up front before they have done anything for you
Tell you not to contact credit reporting agencies directly
Instruct you to dispute information on your credit report that you know to be accurate
Tell you to give false information on an application for credit or a loan
Don’t explain your legal rights when offering their services
A reputable company will explain your rights and help you set up a debt repayment plan—for a fee. Be aware that you can do this on your own for free, but if the structure and organization of working with a service appeals to you, just be sure you are aware of what it will cost and don’t fall for a company out to scam you. If you hire a law firm, however, it may carry far more weight than a "credit repair service" in getting your creditor to compromise you debt and upon payment, this will help your credit score.
Beware Promises of a “New Credit Identity”
No matter what the reason is for your bad credit, there is no easy way out and doing something illegal to repair your credit will just make things worse in the long run. Be very wary of promises that are simply too good to be true, especially when they involve the following:
Use of a Credit Profile (or Privacy) Number. If a credit repair company assigns you a 9-digit CPN, what they are really doing is giving you a stolen Social Security number so that you can open new lines of credit without the creditor having access to your true credit identity. These numbers are often stolen from children and this is a violation of federal law.
Directing you to apply for an Employer Identification Number. An EIN is a legitimate identification number issued by the IRS, but if you are not actually a business, it is illegal to use one to apply for credit.
If you are caught using either of these numbers, you could be charged with a crime and face stiff fines or jail time. Any credit repair service attempting to use such tactics should be reported to your state’s attorney general or the Federal Trade Commission.
The Consumer Law Group Is Dedicated to Preventing Fraud and Improving Your Credit
Our attorneys work every day to protect consumers from violations of the Fair Credit Reporting Act, auto fraud, Virginia’s lemon law, and the Fair Debt Collection Practices Act. We are happy to provide information to your friends and neighbors to help them avoid being the victim of a scam, and in the right cases to help settle their debts and improve their credit score.