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.”
If you are interested in learning more about Credlocity and how they can help you improve your credit score, you can visit our website at or call us at (267) 225-4198.
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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