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How to Avoid Credit Repair Scams

Writer's picture: Joeziel VazquezJoeziel Vazquez

If you have a low credit score, you may be tempted by companies that promise to boost your credit score by hundreds of points in as little as 45 days. However, many of these companies are running credit repair scams that can cost you money and damage your credit further.

What are credit repair scams?

Credit repair scams are schemes that claim to improve your credit by removing negative information from your credit reports, such as late payments, collections, bankruptcies, foreclosures, etc. They may also claim to add positive information to your credit reports, such as authorized user accounts, tradelines, or credit building products.

However, these claims are often false, misleading, or illegal. For example:

  • Some credit repair companies use “credit piggybacking” to artificially inflate your credit score by adding you as an authorized user to a stranger’s credit card account. However, this practice is risky and unethical, and it may not have any lasting effect on your credit score.

  • Some credit repair companies file fake identity theft reports on your behalf to explain the negative items on your credit reports. However, this is fraud and can get you into legal trouble. It can also backfire if the credit bureaus verify the accuracy of the information on your credit reports.

  • Some credit repair companies charge you illegal upfront fees before providing any services. This is a violation of the Credit Repair Organizations Act (CROA) and the Telemarketing Sales Rule (TSR), which prohibit credit repair companies from charging fees until they have completed the promised services.

  • Some credit repair companies offer bogus business opportunities that claim you can make millions by operating your own credit repair company. However, these opportunities are often scams that require you to pay hefty fees for training, software, or leads that are worthless or nonexistent.

How can you avoid credit repair scams?

The best way to avoid credit repair scams is to be skeptical of any company that makes unrealistic or exaggerated promises about improving your credit. Here are some tips to help you spot and avoid credit repair scams:

  • Do your research. Check the company’s reputation with the Better Business Bureau, online reviews, and consumer complaints. You can also contact your state attorney general’s office or consumer protection agency to see if there are any actions or lawsuits against the company.

  • Know your rights. Read and understand the contract and disclosures before signing anything. You have the right to cancel the contract within three days without paying any fees. You also have the right to dispute any inaccurate or incomplete information on your credit reports for free.

  • Don’t pay upfront fees. As mentioned above, it is illegal for credit repair companies to charge you fees before they have performed the agreed-upon services. If a company asks you to pay upfront fees, walk away.

  • Don’t share personal information. Never give out your Social Security number, bank account information, or credit card information to a credit repair company unless you are sure they are legitimate and trustworthy. Also, don’t sign any documents that authorize them to act on your behalf without verifying their credentials and authority.

  • Don’t lie or commit fraud. Don’t file false identity theft reports or dispute accurate information on your credit reports. This can get you into legal trouble and hurt your credit further.

What are some reputable alternatives to credit repair scams?

If you want to improve your credit score legitimately and ethically, there are some reputable alternatives to credit repair scams. For example:

  • You can get free or low-cost credit counseling from a non-profit organization that can help you create a budget, manage your debt, and improve your financial habits. You can find a certified credit counselor through the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

  • You can use a secured credit card or a credit builder loan to establish or rebuild your credit history. These products require you to deposit money upfront as collateral and then use it as a line of credit or repay it over time. This way, you can demonstrate responsible borrowing behavior and improve your credit score over time.

  • You can monitor your credit reports and scores regularly and dispute any errors or inaccuracies that you find. You can get one free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) every 12 months through annualcreditreport.com. You can also get free access to your credit scores from various sources online.

A word from Credlocity CEO

Credlocity is a company that offers legitimate and ethical credit repair services to help consumers improve their credit scores and achieve their financial goals. Unlike credit repair scams, Credlocity does not make false or unrealistic promises, charge illegal upfront fees, or engage in fraudulent or unethical practices.

According to Credlocity CEO, “We are committed to providing honest, transparent, and effective credit repair services to our clients. We follow the laws and regulations that govern the credit repair industry, and we only dispute information that is inaccurate, incomplete, or unverifiable on our clients’ credit reports. We also educate our clients on how to maintain and improve their credit scores in the long run.”

Conclusion

Credit repair scams are rampant and can cost you money and damage your credit further. To avoid credit repair scams, you should be skeptical of any company that makes unrealistic or exaggerated promises about improving your credit, and follow the tips we have provided in this blog post. You should also consider reputable alternatives to credit repair scams, such as credit counseling, secured credit cards, credit builder loans, and legitimate credit repair companies like Credlocity. By doing so, you can improve your credit score the right way and achieve your financial goals.

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Trust

Report Credit Repair FraudState Attorneys GeneralMany states also have laws regulating credit repair companies. If you have a problem with a credit repair company, report it to your local consumer affairs office or to your state Attorney General (AG).Federal Trade CommissionYou also can file a complaint with the Federal Trade Commission. Although the FTC can't resolve individual credit disputes, it can take action against a company if there's a pattern of possible law violations. File your complaint online at ftc.gov/complaint or call 1-877-FTC-HELP.Did we treat you unfairly? Did we break the law? Contact the Pennsylvania Attorney Generals Office or the Philadelphia District Attorneys Office.​Credlocity will always provide honest, fair, and legal services TRUST that.

Disclaimer/Disclosure

Credlocity Business Group LLC is the parent company of Credlocity formerly known as Ficostar Credit Services and is in no way affiliated with FICO © 2020 Fair Isaac Corporation. FICO is a company that offers a credit scoring model called the FICO® Score. FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use borrowers' FICO scores along with other details on borrowers' credit reports to assess credit risk and determine whether to extend credit.

*VERY IMPORTANT DISCLOSURE*

We are a credit repair company. You have the right to dispute anything on your credit report yourself. This right is outlined in The federal Fair Credit Reporting Act (FCRA) which promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.

Travel Partnership Refund Policy

Copyright © 2024 Credlocity Business Group LLC. All rights reserved. Credlocity does not provide legal advice. Credlocity does not guarantee the permanent removal of verifiable tradelines. Credlocity requires active participation from its clientele regarding requested documents and information, including investigation results for the sought-after outcome of a healthy, accurate credit report. Individual results may vary.

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