Do You Know How To Spot Credit Repair Scams?

You may see ads on TV, online, or in the newspaper claiming that your bad credit can be quickly and easily fixed. Don’t fall prey to these credit repair scam artists.

Avoid companies that tell you accurate information can be changed or erased to improve your credit. This is simply not true and nothing but time will cause negative information on your report to disappear. If the information is accurate, you will just have to live with it.

Avoid any company that says only they can remove inaccurate information. These claims are false because you have the power to remove inaccurate information yourself. All you need to do is fill out an online form with the credit bureau and report the inaccurate information. You may have to follow up with additional documents, but the process is easy. You can do it for free yourself.

Be wary if you are asked for a large sum of money before the credit-repair company completes the job. A money-back guarantee will not protect you from a disreputable company.

Avoid new credit identities

If you have filed for bankruptcy, you may be the target of a credit-repair scheme, often called “file segregation.” Here, you are promised a chance to hide unfavorable credit information by establishing a new credit identity.

However, there is a problem: File segregation is illegal. If you use it, you could face fines or imprisonment.

Other scams

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

• Credit by phone. Advertisements promise that “guaranteed” credit or cash loans are only a phone call away. Instead, the caller might only receive a list of banks offering low-interest credit cards or a booklet on how to establish credit — and a charge of $50 or more. Consumers rarely end up getting credit.
• 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. This rarely will help you obtain other credit.
• 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.

If you suspect a credit-repair scam, file a consumer complaint with the Attorney General’s Office online or by calling the Consumer Protection Hotline at 1-800-392-8222.

Never give out your bank account or credit-card number unless you know the company is reputable. Don’t be a victim of these credit card repair scams.