As many individuals make New Years’ resolutions to improve their credit in the New Year, more scammers and credit repair fakes are launching in an attempt to separate you from your money without any help to your credit. The Better Business Bureau is placing a renewed warning to consumers who encounter companies claiming the ability to fix your credit by removing negative credit information, bankruptcies, judgments, and liens. These can be especially tempting for individuals who are struggling with debt but use extreme caution when choosing a credit repair company to work with and be on the lookout for these red flags.
Avoid any consolidators that charge fees before the debts are settled or that pressures you to make “voluntary contributions “or “voluntary fees”. Credit repair scams will take your upfront money and don’t perform any services that help your credit. After you pay, it can be difficult, if not impossible to get your money back or even reach a representative at the scam company.
Avoid “New Government Program”
Telling you that you are eligible for a “New Government Program” is a favorite line for credit repair scams. The truth is that there aren’t really any government programs that help you repair credit. The Federal Trade Commission does, however, offer directions on how to find legitimate credit repair help.
Stop Talking to your Creditors
Avoid any company that tells you to stop talking to your creditors. Scammers like to employ this tactic to keep you in the dark about what is going on with your credit, however, not communicating with your creditors has dire consequences which can include further damage to your credit and collection actions.
Won’t Send You Free Information
The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about their services and requires that they explain your right to cancel, how long the credit repair process will take, the total cost you’ll pay, and any guarantees they make in writing. If the company wants you to pay first, it’s a good indication that it is a scam.
Enroll You before Reviewing your Credit
There is no “one size fits all” for fixing credit. Everyone has different creditors, different types of debt, and different amounts, and if a company is willing to enroll you before looking at your unique situations it’s safe to say that it’s probably no an effective credit repair company.
There are many legitimate options for improving your credit that won’t leave you in a worse position than you started, including negotiating with your creditors directly, obtaining credit counseling, and filing for bankruptcy protection. If you encounter a problematic credit repair company that seems like a scam, the FTC encourages you to file a complaint online or with your state attorney general.