Beware of Scams to Improve Your Credit Score

black background and the word scam in white

Warning borrowers to beware of scams to improve your credit score is something you see in almost every financial advice site. That is because you find the ads practically everywhere. You see them in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

“Credit problems? No problem!”

“We can erase your bad credit-100% guaranteed.”

“Create a new credit identity-legally.”

“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

Do yourself a favor and save some money, too. Don’t believe these statements. They’re just not true. Only time, a conscientious effort, and a plan for repaying your debt will improve your credit report.

The Warning Signs

If you should decide to respond to an offer to repair your credit, be mindful. Don’t do business with any company that:

  • wants you to pay for credit repair services before services are provided
  • does not tell you your legal rights and what you can do on your own-for free
  • suggests you create a new credit report/file using an Employer Identification Number instead of your Social Security number
  • advises you to dispute all information on your credit report or take action that seems illegal. If you follow advice and commit fraud, you can be subject to prosecution

Credit repair scam companies are out in full force with all of the subprime mortgages and credit card debt. They like to prey on the weak and needy. Be careful.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.


Other scams

Consumers looking for an easy fix often are targets of other credit related scams:

Gold or platinum cards: Beware of promotions for gold or platinum cards that promise to get you credit and build your rating. Although they may sound like all-purpose credit cards, some cards only permit you to buy merchandise from special catalogs or sites and will not help you obtain other credit. This is not to say that there are not plenty of legitimate offers for gold and platinum cards because there are. In fact, most are perfectly fine. Just do your research before applying.

Checking-account scam: This scam, which tricks you into disclosing your checking-account number, typically begins with a postcard advertising easy credit approval or low-interest credit card rates. When you call, you are asked for your checking-account number as “verification.” Your number then can be magnetically encoded on a draft, which is forwarded to your unsuspecting bank for payment from your account. Never give out your bank account or credit card number unless you know the company is reputable.

Helping Yourself

If you have less than perfect credit, you are probably attracted to the promise credit repair and debt consolidation. While there are many things companies can do to help you fix your credit, there are a number of things you can do yourself to get back on your feet. Many people make the mistake of avoiding their lenders. They choose to ignore phone calls or letters which are sent in the mail.

You want to make sure you contact your lenders promptly when you find yourself in a situation where you may not be able to make payments. Calling them to look for options is a responsible thing to do. They are likely to work with you, because they have a vested interest in getting back the money which is owed. If you are willing to setup a budget, most of your lenders will work with you. If you work with your lender, it is likely you won’t have to worry about repairing your credit.

Even though your credit score may slightly be lowered if you have problems making payments, things will be a lot worse if you choose to ignore the lender. By showing that you are trying to pay off your debts, you will often find that your credit report remains relatively unchanged. When you decide to ignore them, this is when you will be reported to the credit agencies. Once this happens, it will become difficult to apply for a car, home, or even a job. If you are already in this situation, you should start looking at credit repair services which can help you rebuild your credit.

If you find that information on your report is false, you can file a dispute with the credit agency to get the issue resolved. Though this will cost you nothing, you have to explain why the information on the report is false.

Not All Credit Repair Companies Are Bad

Not all credit repair companies are bad. In fact, most are a useful option to help get your credit back on track. However, credit repair is an industry that is full of misinformation and fraud. Should you choose to use a credit repair company, please consider contacting the Attorney General’s Consumer Protection Hotline at 800-392-8222 to check for complaints made against a company. Do your own research online an look for reviews of the company you are considering. If anything seems “off” it might be best to look elsewhere for help.

There are plenty of organizations that can help you setup a budget, payment schedule, and assist in communicating with your lenders. It is also important to know your rights with the Fair Credit Reporting Act. Just do your research and keep the above information in mind as you shop around and you will have no trouble finding a real company to hep get you back on track.

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