What to Look For When Seeking Help With Your Credit
Scammers love to take advantage of someone else’s misfortunate situation. Given that credit is now king and not cash, credit determines your access or denial to many essentials to function in daily life such as the ability to get or keep a job, a home (rent or purchase), a car, access to emergency funding, etc. The COVID-19 pandemic has also fueled this even more. Scammers know this and take advantage of desperate consumers who are seeking to improve their credit. In this article we show you how to easily identify scams, what to do if you encounter a scammer, and what to look for when you are seeking help with your credit. We will also show you what a reputable credit repair company looks like.
How to Identify a Credit Repair Scam
Credit repair scams can easily be identified if you know the laws and the business practices in which they operate. It is important to know when you are seeking credit repair that not everything that glitters is gold. Beware of lofty promises. If it sounds too good to be true, I will say without hesitation that it is too good to be true.
- Credit “Sweeps” – This is a highly unethical practice where the scammer has you file false police reports with claims of ID theft on all of your negative tradelines. Also, there is another form of credit sweep where they get you another Social Security identification and builds a fresh credit profile. If caught doing either of the scenarios both the credit repair company and the consumer land in very hot water and could face severe penalties, including prison time.
- Anyone Charging Up Front Fees – The Credit Repair Organizations Act (CROA) strictly prohibits a Credit Repair Company collecting any money before the performance of their promised service(s). Services should be clearly defined, and define when service is complete. First Work/Onboarding fees are permitted if the service is defined and completed.
- Anyone Not Licensed or Bonded – Check your state’s Secretary of State business registry to ensure the business is registered and bonded. Each state has different requirements for businesses.
- Anyone Doing Out of State Business – If a credit repair company is doing business out of state MUST meet that state’s requirements to do business in that state. Check your state’s Secretary of State business registry to ensure the company meet’s that state’s requirements.
- “609” Letters – 609 of the Fair Credit Reporting Act is the most misused and misrepresented portion of that law. Some will promise 609 letters will get all your negative items removed because the credit bureaus must be able to verify the originating documentation. However, this is NOT TRUE. Section 609 of the FCRA states it must disclose everything they have on a consumer’s credit file. That is your credit report! When you go to https://annualcreditreport.com and order your credit report, the credit bureaus have satisfied seciton 609 of the FCRA.
- Unrealistic Promises and Guarantees – As much as we want to get every derogatory item deleted and get everyone an 800+ credit score on the first try, reality is there is no way anyone can guarantee how a credit bureau or a data furnisher is going to act on a dispute letter. Even a well formulated dispute based on actual facts regarding real errors on a credit report can go without response or resolution. The truth is credit repair is a process and not an overnight solution. Credit repair does not get you out of debt. Credit repair is a process of disputes, credit building and credit education, and it takes time. Avoid anyone who promises a quick fix, it’s not gonna happen that way.
- Shady Payment Methods – Most will ask you to pay with Paypal, CashApp, or Venmo which do not allow credit repair. They set these up as individual accounts rather than business accounts to pull this off.
- Long and Drawn Out Contract – A contract should NEVER be longer than 6 months. Although credit repair is a process, dragging the customer out in a long expensive contract (I don’t care if it’s the largest and most widely known company *cough cough*). Whatever is going to change on a consumer’s credit file through the dispute process will happen in that period of time. If you are in a contract longer than 6 months you are throwing your money away.
- Anyone Offering Credit Repair in Georgia – Credit repair services are illegal in Georgia, although lobbyist and individuals are working for a repeal of this law, currently credit repair is not allowed even from out of state providers.
Not All Credit Repair is Scam, Here is What a Reputable Company Looks Like
Now that you know what to look for as far as credit repair scams, here is what a reputable credit repair company looks like. You will find quite s stark difference.
- No Gimmicks or Surprises – Everything is disclosed on the company’s website and in the client’s consultation. The contracts are clear, and the client leaves with a clear understanding of the credit repair process. The client will know their battle plan.
- Partnered with Lenders & Other Professionals – Of course the Real Estate industry amongst others see the value of credit repair. They often send their clients who need a little help with their credit to good reputable companies.
- Never Charges Up Front, All Fees Disclosed – A good reputable company will follow CROA and never charge up front before any service is completed. There are no surprise fees and everything is disclosed up front on the company’s website and in their contracts so there is never a surprise or any guesswork.
- The Company Offers a Full & Comprehensive Service – A reputable credit repair company will offer a wide variety of services to help their clients improve and maintain their credit. Services like educational services to teach you how credit works and how to manage it, to the dispute process, credit monitoring, and credit building.
- A Solid Dispute Process Based on Fact – A reputable credit repair company will use a dispute process based on actual issues or errors (There is no such thing as an accurate credit report). These disputes would hold true even if a judge or jury were to read it. There are never any false claims of “not mine”, “never late”, “show me the contract with my signature”. (When was the last time you signed a contract for a credit card?)
- Holds All Appropriate Licenses and Bonds – Even when doing business out of state.
- Realistic Goals – The fact remains not every derogatory tradeline is getting deleted, even with the best letters or most seasoned professional. Instead the company will leverage other items to get a score up, and also help clients seek litigation if necessary.
- Offers Legitimate Payment Methods – A reputable company with have a real merchant account to accept payment, or use an escrow service like CREDZU
- Reasonable Contracts – As mentioned above a credit repair contract should not exceed 6 months.
We hope this article helps you choose the right option for you. be sure to shop around and do your research before signing any contracts or paying any money. If you need credit repair services contact Credit Wellness Solutions for a FREE Consultation.
