How to Spot a Fraudulent Credit Repair Service – Education
- They promise they can erase a bankruptcy. No company can erase a legitimate negative issue with your credit. If you encounter a company that promises that they can make a bankruptcy go away, they are not telling you the truth. Only time and responsible credit management can remove a bankruptcy from your credit history.
- They say they can eliminate debt. No company can erase a debt that you legitimately owe. It is legal and possible to get erroneous accounts removed and to negotiate settlements. However, there is no magic wand that will simply make legitimate debts disappear.
- They promise a new credit identity. If someone promises you a clean, new credit identity, they are breaking the law. When a company promises this, what they give you is a number that looks like a Social Security number. However, it is in reality an Employer Identification Number that has specific legal uses. It cannot be legally substituted for a personal Social Security number, and anyone who says that it can is putting you in danger of breaking the law.
- They tell you to lie on credit applications. This is something that can leave you with expensive fines or worse and no honest company would do that. If you encounter a company that encourages you to be dishonest when applying for a home loan, do not do business with them.
- They fail to explain your legal rights. When dealing with credit repair agencies, you have a few specific rights under the Credit Repair Organization Act (CROA). For instance, you have the right to cancel the service within three days without being charged. You have the right to know, in detail, what services they are offering. You are entitled to know how long the process will take. Any company that refuses to supply this sort of information is in violation of federal law.
- They try to charge you before they’ve done anything to help. The CROA also forbids charging for credit repair before services have been rendered. If a company is looking for money in advance, this is a good sign that their service is a scam.
If you encounter any of the red flags above, walk the other way. These are clear signs of an expensive and ineffective credit repair scam. When it comes time to fix your credit so that you can move forward with home ownership dreams, entrust your financial future to a company that is reliable, trustworthy and has your best interests at heart.