If you are looking to repair your credit, you need to be aware of the common signs of scams so you can keep yourself protected.
- Some common red flags for credit repair scams include companies that demand payment upfront and offering you a new credit identity (which is illegal).
- If you want to fix your credit, you can use legitimate avenues such as disputing errors and paying your bills on time.
- If you have been successfully targeted by a credit repair scam, you need to take measures such as stopping payments and monitoring your credit.
Having bad credit can feel overwhelming, especially when it prevents you from securing a loan, buying a home, or even getting a job. When you’re desperate to improve your credit score, you might be tempted by companies promising fast fixes. Unfortunately, many of these offers are scams designed to take your money without actually helping you.
At Loker Law, we frequently help people who have been victimized by crimes like identity theft and bad faith financial scammers. As consumer lawyers in California, we want to help you recognize and avoid common credit repair scams before they cause more harm. This blog can help you identify these scams and, in the event you fall for one, know what measures to take in order to protect yourself. Give it a read below and be armed with the knowledge you need!
How Do Credit Repair Scams Work?
Credit repair scams often target people who are in tough financial situations. These scams promise to erase negative items from your credit report, boost your score quickly, or even give you a “new” credit identity. While these claims may sound appealing, they often involve illegal or deceptive practices that can leave you worse off than before.
Recognizing the red flags can help you steer clear of these scams and take legal, effective steps to repair your credit.
Signs Of Common Credit Repair Scams
Not all credit repair companies operate with bad intentions, but there are key warning signs that indicate you may be dealing with a scam. Here are some red flags to watch out for:
- Upfront Payment Requirements: If a company demands payment before performing any services, it’s likely a scam. Legitimate credit repair services do not require full payment upfront.
- Guaranteed Results: No company can legally guarantee that they will remove negative items from your credit report. If you hear promises of a quick fix, be wary.
- Lack of Transparency: If a company is reluctant to explain your legal rights or won’t provide a written contract detailing their services, that’s a major red flag.
- Encouraging False Information: Some scammers suggest that you lie on credit applications or dispute accurate information on your credit report. These actions are illegal and can lead to serious consequences.
- Offering a “New” Credit Identity: A common credit repair scam involves selling clients a new Social Security number or Employer Identification Number (EIN) to create a fresh credit profile. This is known as “file segregation” and is illegal.
If you encounter a company that displays any of these red flags, you should disengage immediately. In order to keep other people protected, you can report them for fraud to the Federal Trade Commission (FTC) or the Better Business Bureau.
The Truth About Fixing Your Credit
The reality is that improving your credit takes time and effort. There are no shortcuts, but there are legal and effective ways to boost your credit score over time:
- Check Your Credit Report Regularly: Mistakes happen, and credit reporting agencies are not infallible. You are entitled to one free credit report per year from each of the three major credit bureaus (Experian, Equifax, and TransUnion). Review your reports carefully for errors or fraudulent activity.
- Dispute Legitimate Errors: If you find inaccurate or outdated information on your credit report, you have the right to dispute it. A legitimate credit repair service—or a consumer lawyer—can help guide you through the process.
- Pay Bills on Time: Your payment history has the biggest impact on your credit score. Setting up automatic payments or reminders can help you avoid missed payments.
- Reduce Your Debt: High credit card balances negatively impact your credit score. Paying down your debt will improve your creditworthiness over time.
You can also work with an experienced financial manager or consumer attorney in order to have more insight on your legal options for fixing your credit. If you have credit errors on your report, a consumer lawyer can be your guide through the process of having those errors corrected.
What To Do If You’ve Been Scammed
If you’ve fallen victim to a credit repair scam, don’t panic—you still have options. Here’s are some of the steps you should take:
- Stop Payments Immediately: If you’ve signed up for a fraudulent service, contact your bank or credit card company to stop any recurring payments. If possible, you can attempt to do a chargeback if your card has already been charged. In some instances, you might find it helpful to lock the card so it cannot be charged.
- File a Complaint: Report the scam to the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and your state’s attorney general.
- Monitor Your Credit: Keep a close eye on your credit reports to ensure that no additional fraudulent activity has taken place. If you fear further fraudulent activity, you can freeze your credit, which will prevent anyone from taking out a card or a loan in your name.
- Seek Legal Assistance: A consumer lawyer can help you take legal action against fraudulent companies and guide you in rebuilding your credit the right way.
When you are dealing with scams that target your finances and creditworthiness, you need to be vigilant. If you are ever unsure of what to do in these situations, seeking out professional legal and financial help can set you on the right path and give you a greater chance of having your issues resolved.
Loker Law Can Help You Fight Common Credit Repair Scams
At Loker Law, we understand how frustrating and damaging credit repair scams can be. If you believe you’ve been targeted or want help repairing your credit the legal way, we’re here to assist you. Our team is committed to protecting consumers and ensuring that you have the knowledge and resources to rebuild your financial future. Reach out to book a free consultation today to discuss your situation and learn how we can help you take back control of your credit and your life. Don’t wait because time is of the essence!
