Avoiding Credit Repair Scams

by YourFinancesSimplified on August 31, 2012 · 3 comments

Many reputable companies offer their services in helping you with your credit repair, and there are some circumstances when calling in an expert makes the process faster and less of a headache for you. Of course, these services are not charities, and they offer their services in exchange for a fee. Depending on the type of credit repair you need, these fees can be spare change, or they can take a significant chunk out of your wallet. As always, whenever there is money involved, some people aim to take advantage of people who are worried about their credit rating.

Credit repair scams have been present for decades. Even in the old days, there were people who would offer to assist you in fixing your credit and then abscond with your money without doing any work at all. It has become even more rampant with the advent of the internet. It’s so easy to set up a shell website, do some SEO to make it stand out, and voila, they receive instant clients from those doing web searches. Having to repair your credit rating is bad enough and can cause massive stress. If you add the fact that you were scammed on top of that, you will definitely be headed to the loony bin.

Just like with any monetary transaction, you should always be careful with your dealings, especially with individuals and companies that you do not know. With a little vigilance, you can easily detect and avoid those scammers who pretend to have a legitimate credit repair service.

Do your Due Diligence

Research, research, research! Always do your research whenever you deal with somebody. You need to vet them to determine whether they are a legitimate company and whether they have been truly effective in helping people repair their bad credit. By vetting, it doesn’t just mean typing in the service provider’s name on a search engine and going through the results. It actually involves doing some legwork. You need to ask for the company’s business registration and check with the appropriate authorities to ascertain whether this person or firm is legitimate and if there have been any accusations of fraud against it.

It’s the least you can do since you will be shelling out a lot of money for the credit repair.

Ask for Referrals

Any salesperson will tell you that one of the best sources for clients is referrals from their existing clients. Referrals can help you verify that the company is legitimate. People will not just refer anybody. As the referrer, his own reputation is at stake. If you find yourself in a situation where in you need help in doing credit repair, ask people who have had similar problems in the past to refer any service that they have used. This may be a sensitive topic so navigate carefully. People usually do not want to be reminded of any history of bad credit.

Separate Fact from Fiction

Suspicious credit repair services will often promise you the sun and the moon. They will claim that they can erase what is written on your credit report, or get you a new social security number, or you can ride on somebody else’s credit score to raise your own. You have to know what is true and what is not.

Be Wary of Those Asking for an Upfront Payment

Credit repair services that immediately ask for an upfront payment are suspicious and should raise some red flags. A binding contract and maybe a small retainer should be enough for them to start working on your credit repair. Full payment should be done once the job has been completed and the contract has been met.

They Should Brief You on Your Rights

By law, credit repair services must inform you of your rights within three days of making an offer. These rights tell you what you can and cannot do when it comes to doing credit repair. Examples of these include your right obtain a free credit report and the right to examine said credit report and make any disputes to what is written in your credit report. You should be suspicious of any credit repair service that keeps you on the dark on this one. Also, when a deal is made, these credit repair companies should give you a contract for their services. Have your own lawyer examine the fine print and make sure there are no unscrupulous loopholes before you sign on the dotted line.

With enough awareness and due diligence, you will be able to separate the legitimate credit repair companies from the fraudulent ones.

Do you have any other tips on how to avoid being scammed? Have you been scammed in the past or do you know someone who has? Do you have advice to help others avoid this situation?


YFS is owner and author of Your Finances Simplified. He was born and raised in West Philadelphia and is now a financial adviser, IT contractor, landlord, and treasurer of a non-profit. He created his blog partly due to his desire to help people with their finances..

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{ 3 comments… read them below or add one }

1 Kurt @ Money Counselor September 1, 2012 at 10:53 am

“Many reputable companies offer their services in helping you with your credit repair…” Wow–could you name one please?

In my opinion, “credit repair” = scam. There is no way permanently to remove accurate, negative information from a credit report before the usual 7-year life expires. Any company that implies otherwise is scamming you.

If your credit report contains negative, INaccurate information, it’s very easy to get it corrected yourself. You needn’t pay any fees to do it. For very simple step-by-step instructions, just search “FTC Fact Sheet Credit Repair: How to Help Yourself”.


2 Crystal @ Broke-Ass Mommy September 3, 2012 at 3:30 am

I am a big supporter of asking for referrals from pretty much anybody I do business with. I love being able to check into past results and experiences. Great advice!


3 Pat December 26, 2012 at 5:06 pm

There are indeed a lot of scams out there. The best way to fix your credit is to go through a professional and reputable company. I suggest to people Lexington Law. They have been around since 1991 and have helped thousands of people. They are a real law firm with real lawyers. They will certainly be safe and effective.


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