In past blogs, we’ve touched upon some of the types of business we won’t deal with. One example is the credit repair industry. You have probably heard their ads on the radio or gotten letters to the effect:

“Are you having credit problems? Relax! We can erase your bad credit history, including defaulted loans, liens, judgments and bankruptcies. Our service is 100 percent guaranteed and perfectly legal”.

If that sounds too good to be true, you’re right – it’s a scam. A legitimate credit repair operation would never make these kinds of claims. If someone is trying to sell you a quick fix for credit problems, move along and don’t waste your time (or money). There are ways to legitimately improve your credit rating, but it will take time and effort. You can do it yourself with just a little preparation.

Credit repair scams prey on people who want to make a purchase on credit – like a home or a car — despite a poor credit history. They promise quick results but require you pay an upfront fee. Unfortunately, these scams are ineffective – they cannot remove accurate negative information from your credit report. What they can do is take your money and leave you with the same lousy credit report.

Here are some telltale signs that a credit repair offer is bogus:

  • They require you to pay in advance. In fact, the Credit Repair Organizations Act specifically states that a credit repair company cannot require you to pay until after they have completed their promised services.
  • Scammers never tell you your actual legal rights and how you can fix your credit rating yourself.
  • Scammers dissuade you from contacting the three major national credit bureaus directly.
  • The company claims it can get rid of all the negative information in your credit report, even though it is accurate.
  • They try to get you to create a “new” credit identity by applying for an Employer Identification Number (EIN) for you to use instead of using your Social Security Number (SSN).
  • The scammers tell you to dispute the negative aspects of your credit report, even if accurate.

What they won’t tell you is that it is a federal crime to lie on your credit application, to use a false SSN or to misuse an EIN. You could be facing a fraud charge for any of these actions. This is why never sells lead lists to credit repair companies – since we can’t tell the few good ones from the mountain of scammers, we just avoid them all.

Eric Bank