Whether it is your credit or business credit, you need good numbers to apply for a credit card or a loan. Credit card issuers, banks, and other lending institutions offer loans or credit cards at lower interest rates. The terms and conditions of the loan are also very easy. Exactly the opposite happens when your credit score is bad.
Whenever you apply for a credit card or loan, the lender pulls your credit report from the credit bureaus and checks your credit score. Your credit report tells about your credit history. The lender wants to know whether you are a reliable borrower or not. Decisions like whether to approve a loan/credit card or not, what will be the interest rate and what will be the terms and conditions of the loan.
As having a good credit score is very critical, many consumers hire credit repair companies to improve their credit scores. Certified credit repair companies do help in improving credit scores. However, a consumer should learn how to spot credit repair scams and how to fix your credit repair scams.
A legitimate credit repair company always follows the Credit Repair Organizations Act.
What is a Credit Repair Scam?
You have probably received emails, calls, or seen ads by credit repair companies promising to fix your credit score within 30 days. Some companies also promise to create a “new credit identity”. A new credit identity means a fresh start. A consumer gets a Social Security Number illegally. However, you get credit only when you use your number to apply. Using a number other than yours leads to fines or prison.
How To Spot Credit Repair Scams?
If the company follows the Credit Repair Organizations Act then you are safe. This law restricts a credit repair company from making false claims and promises. If the company does not follow the law, it’s a scam. Following are the seven signs of credit repair scams:
1. The credit repair company does not explain your state and federal credit repair rights. A scammer does not tell you that you can get an annual free copy of your credit report from each credit bureau. You are not informed that you have the right to dispute errors and mistakes in your credit report.
2. A scammer does not provide you with a copy of the contract. You must read the contract before you sign it. Don’t pay anything unless you read the contract.
3. A scammer’s contract does not contain the following details:
a). The cost of the services
b). Details about the services the company will offer
c). The time it will take to perform the services
d). The name and address of the credit repair organization
e). Most importantly, a statement telling you that you have the right to cancel the contract within three days after signing it.
4. The company asks to pay before performing any services. A company breaks the law by charging upfront fees.
5. A scammer promises to remove accurate information from your credit report. This is illegal. The company might ask to claim identity theft to get accurate information removed.
6. The company promises to use a new social security number to create a new identity. It might also promise to create a new profile using your federal Employer Identification Number.
7. The company asks you to sign a document that waives your rights under the Credit Repair Organizations Act.
How To Fix Your Credit Repair Scams?
If you are looking for credit repair services, you must be aware of the Credit Repair Organizations Act. And, if you are already scammed, take the following steps:
Keep A Copy Of Your Transaction Related Documents
Always keep originals and at least one copy of each document involved in transactions. Make sure that you have a copy of the contract detailing the services the company promised to offer. You must be able to prove that you have paid for the company’s services.
Ask For Refunds
A credit repair company has no right to ask you to pay before providing services. It breaks the law by doing so. If you have already paid, ask the company to refund your money. If it refuses, let the scammer know that you will do everything to get your money back.
Report to the FTC
The Federal Trade Commission regulates credit repair companies. If this government body receives enough complaints about that company, it will launch an investigation. The FTC can sue the company and force it to refund the consumer’s money. The FTC can also force the company to close.
Report To The State Attorney General
The attorney general is responsible for ensuring that the laws are enforced. So, report the scammer to the attorney general.
Complain To A Licensing Office, Trade Association Or A Protection Agency
Get advice from your local protection agency. You can report the company to the National Association of Credit Services Organization or the licensing agency.
You can also file a claim with the Better Business Bureau or sue the company in small claims court.