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How to Recognize a Credit Repair Scam: Watch Out For These 6 Warning Signs!

Establishing a good credit score ensures you get hassle-free credit application acceptances, credit line extensions and a number of other convenient amenities that will make your life easier.

In a nutshell, poor credit hampers your mobility in society.

That said, you shouldn’t blindly trust companies claiming to offer you credit repair services right off the bat. Credit scam is more common than you might think. Nearly 41 million Americans have already been victim to identity theft!

There are several warning signs that you should stay on the lookout for if you want to protect yourself from credit scams.

How To Recognize Credit Scams

credit-repair

1. Ask For Upfront Payments

Did you know that in the U.S, under the Federal Credit Repair Organizations Act, it is prohibited for companies to demand advance payment for credit repair services?

This means that you do not have to pay them for services you haven’t received. If your service provider is asking for upfront payments, they are definitely scamming you!

It is also important to note that this Act requires both parties to maintain written credit repair contracts.

2. Advises You Not To Contact Credit Report Agencies

As a citizen of the U.S, you have the legal right to an annual complimentary report from any of the three major credit reporting agencies.

Your ears should automatically perk up when the ‘credit repair services’ company advises that you steer clear of credit bureaus and instead ask for a fee to obtain reports from these agencies.

You’re only paying for a service that’s supposed to be free.

3. Gives Vague Information About Your Legal Rights

Under the Federal Trade Commission (FTC) credit repair companies are required by law to explain the following to their clients:

  • Clear details about the services they’ll perform in the written form
  • Your right to cancellation within three days of the contract without charge
  • The total cost of their services

If your credit consultants are not being forthcoming about any of the above, something is wrong.

4. Claims They Will Create A ‘Credit Identity’ For You

In these types of credit repair scams, companies often promise to create a new credit identity for clients for a fee. They ask you to apply for credit using a Customer Profile Number (CPN) or an Employer Identification Number (EIN) that they provide.

In reality, these IDs are just stolen Social Security Numbers. It is a federal crime to obtain an EIN or CPN under false pretenses and lie on a credit application form—which is exactly what these scammers make you do.

5. Make Larger Than Life Promises

If you feel like your company’s promises of credit repair are too good to be true—they probably are. Companies that are experienced in the game of credit scams often make wild claims to boost your credit score in just a few weeks.

The truth is you are not likely to see effective results in that short amount of time. Each client’s credit history is different and offering generic timelines like these is suspicious, to begin with.

6. Promise To Challenge Credit Reports—Even When They’re Accurate

While it is true that credit reporting agencies can make mistakes while scoring your credit, it doesn’t happen very often.

A company promising to challenge credit reports that have no discrepancies is a sure-fire warning. It is illegal—not to mention plain dishonest—to dispute perfectly accurate credit reports from credit bureaus.

Certified & Secure Credit Service Provider

We at KeyPoint are a professional financial services company based in Fremont with 50+ years of experience in the finance industry.

We offer reliable and guaranteed credit services such as full-service credit repairs, credit monitoring, ChexSystem removal and so much more. Clients get a live progress on the status of their credit score 24/7 so you never have to worry about what happened to your money.

Contact us our professional credit repair consultants today!