How to Avoid Credit Repair Scams

People who want to improve their credit worthiness often resort to credit-repair companies. Those promise to repair a bad credit history for monthly payments or a one-time fee in the hundreds or thousands. Most don't deliver and then disappear. To avoid a scam, so common in this new, growing industry, consider the following.

Difficulty: Moderately Easy

Instructions

1. Check how long the company has been in business. Investigate its track record at your local Better Business Bureau or online. Although a short history isn't a sure-fire sign of a red flag, a new company has more going against it than a better established, older company.

2. Secure an initial free consultation. No company should object to giving an hour-long, obligation-free consultation.

3. Ask the consultant for legal advice on what you can do for yourself without hiring a credit repair company. The company should provide you information on what you can do for yourself.

4. Find out whether they want you to pay fees before they provide credit-repair services. Get up and walk out the door if they do. Under the Credit Repair Organizations Act, you're not required to pay a credit-repair company until it has delivered the services promised.

5. Be alert for requests to create a new credit identity. One common scam is to use a false Social Security number. Another common scam is to register as a business and obtain a new federal tax ID number that doesn't show any credit history.

6. Avoid suggestions to harass creditors or dispute negative entries into your credit history.

Tips & Warnings

• Creating a new or false identity is illegal and can cause you to be charged or prosecuted for fraud.

[TheCreditPro]

on 10/3/2008 Checking out a potential repair company with the BBB before signing up with them is a great suggestion. You should definitely know who you're getting involved with before you become a customer.