How to Avoid Credit Repair Scams

You've seen the ads: "Credit Problems? No Problem!" “We can erase your bad credit — 100% guaranteed.” “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!” For a few hundred (which somehow grows to a few thousand!) dollars, a company promises to restore your good name, as far as your credit history goes, and increase your FICO score. Don't believe it. It's a SCAM. Here's what you need to know.

Difficulty: Easy

Instructions

1. Read this for background. The US Federal Trade Commission, the government agency responsible for truth in advertising, warns consumers about credit repair scams:
   
   "Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money."

2. Recently, the FTC levied stiff fines against Home Buyers Network, Good Credit Co., Home Buyers Consulting Network and GoodCredit.com for failing to deliver on promises of restoring credit. Steer clear of these companies.

3. If you contact any credit repair companies -- including any of those mentioned on this page -- don't make any upfront payments.
   
   It is ***illegal*** under the Credit Repair Organizations Act to collect money in advance (prepayment) for credit repair services. So don't make any payments to anyone until and unless your credit report is actually repaired and improved. A company that asks for money in advance is breaking the law, and is a scammer.

4. For more information, see the links directly below.

Resources

• US Federal Trade Commission information on Credit Repair Scams
• Article on Credit Repair Scams
• Need more information? Try a professional research service.

[Alisiane]

on 10/8/2008 It's awesome when consumers share information like this with one another...it's important that we stick together to rally against people who try to take advantage of people and part them from their hard earned money. Checking companies with the BBB has become a large part of how I do business with companies, and it has saved me a lot of grief and probably money in the long run.

[ResearchJunkie]

on 10/7/2008 These companies know exactly what people with credit problems want to hear and they are taking advantage. Stay away!

[TheCreditPro]

on 10/3/2008 I hope anybody needing credit repair checks out any potential company with the BBB before signing up with them. Be safe!

[ebnickiea]

on 9/3/2008 this is a wonderful article that everyone really needs to read-my husband almost got suckered into one of these scams years ago. If if sounds too good to be true it probably is. THanks!

[peachcobler]

on 8/25/2008 This is such a great article. I hope people will read it before they become prey to those scams.