How to Recognize a Credit Repair Scam

Credit Repair Scam

Credit repair companies must abide by a federal law called the Credit Repair Organizations Act, 15 U.S.C. Sec. 1679, et seq. If certain companies violate this law, you may be able to file a lawsuit against those companies. Find out how you can avoid having a credit repair scam today. This guide provides a quick list for consumers to reference.

Introduction

Credit repair companies must abide by the Credit Repair Organizations Act, 15 U.S.C. ? 1679, et seq., a federal law enforced by the Federal Trade Commission (FTC). This law prohibits deceptive practices by credit repair organizations. You have a right to sue a credit repair organization that violates the Credit Repair Organization Act.

Warning Signs

If you see ads or receive offers to repair or fix your credit, look for warning signs that include: (1) The company wants you to pay before it provides any services. Under federal law, credit repair companies can’t require you to pay until they’ve completed the services they’ve promised. (2) The company doesn’t tell you your rights and what you can do for yourself for free. (3) The company recommends that you don’t contact any of the nationwide credit reporting companies directly. In fact, contacting the national credit reporting bureaus is free. (4) The company tells you it can get rid of the negative credit information in your credit report, even if that information is accurate and current. Technically, no one can do this if the information at issue is accurate and current. (5) The company suggests that you try to invent a “new” credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security number. Following such advice could have very serious consequences–beware. (6) The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness. Again, if the information is accurate and current, then by definition, it should not be disputed. If you’re advised to dispute something that you know to be correct and timely, then maybe it’s time you got a second opinion on that advice.

Tips

If you have a problem with credit reporting, you can submit a dispute directly to the credit bureaus for free; and if trouble persists or extends beyond simply disputing an item on your credit report, you might consider contacting an attorney. Also, if you have just signed up for services with a credit repair organization or someone that claims they can help you improve your credit score, the Credit Repair Organization Act generally give you the right to cancel your contract with any credit repair organization for any reason within three business days. As in any situation, also be mindful of when you need to consider seeking advice from an attorney.

Additional Resources

There are federal agencies—the Federal Trade Commission and Consumer Financial Protection Bureau–that may be able to offer educational materials about credit repair organizations. State authorities might be able to give you good general insight too. However, if you find yourself in a situation where you are approached by or victimized by a company promising to fix your credit, you should consider scheduling an appointment with one of our attorneys for a free evaluation of your situation and whether we may be able to assist.

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