Trick or Treat? Don't Let Credit Repair Company Scams Haunt Your Finances!
As the leaves fall and Halloween approaches, it's time to beware of more than just ghosts and goblins. This month, we shine a light on a different kind of spookiness that could haunt your financial well-being: credit repair company scams.
The Scary Reality of Credit Repair Company Scams
For-profit credit repair companies make enticing promises about repairing credit and boosting credit scores. However, the risk of scams is high, and the potential value is low. Many credit repair companies are more interested in tricks than treats, preying on vulnerable consumers in need of financial stability.
A safer way to improve and understand your credit score is through a reputable credit counselor or nonprofit, such as Tzedek DC’s partner organization, Working Credit. Working Credit is a mission-driven nonprofit that offers FREE one-on-one credit counseling.
Don’t be afraid to ghost a company that you think may be trying to scam you. Here are some red flags to watch out for when dealing with credit repair companies that could be up to no good.
Upfront Fees: It is illegal for credit repair companies to request or accept payment until they have completed the services they have promised, so do not deal with any company that charges an up-front payment (including through a monthly payment plan).
Guaranteed Results: No credit repair company can guarantee specific results, and no one can remove a negative mark from your credit report if it's accurate. Promises of a "new credit identity" or an instant score boost should set off alarm bells.
Lack of Transparency: Scammers often avoid explaining their processes or the specific actions they'll take on your behalf. Legitimate companies are open and transparent about their methods.
Pressure and Aggressive Sales Tactics: If you feel pressured into making quick decisions or signing contracts without sufficient time to review them, it's a sign to walk away.
Incomplete or Inaccurate Information: Be cautious if the company asks you to provide false information or to dispute negative but accurate items on your credit report. Doing so could create legal problems for you.
Defend Yourself Against the Credit Repair Ghouls this Halloween!
Don't be scared! Arm yourself with knowledge and take steps to protect yourself from credit repair company scams.
Check the Company’s Credentials: Check the Consumer Financial Protection Bureau (CFPB) Complaint Database and the Better Business Bureau (BBB) for complaints from previous customers or see if the company is included in the Department of Justice’s vetted list of credit counseling companies.
Review the Contract Carefully: Never sign a contract without thoroughly reading and understanding it. If something seems spooky, consult a legal expert before proceeding.
Monitor Your Credit Report: Regularly check your credit report for free at AnnualCreditReport.com. You can dispute errors and inaccuracies yourself without the need for a credit repair company. Here’s help on how to do that: CFPB guide to disputing errors on your credit report.
Seek Advice From a Trusted Professional: If you need help with improving your credit or disputing erroneous or fraudulent information on your credit report, consider working with a financial or credit counselor, lawyer, or a non-profit organization, such as Tzedek DC with a proven track record of helping consumers.
Report Suspicious Activity: If you encounter a credit repair scam or believe you've been a victim, report it to the Federal Trade Commission (FTC) and the DC Attorney General's office.
This Halloween season, keep your finances safe from credit repair company scams. DON’T LET THE TRICKS OF SCAMMERS HAUNT YOUR FINANCIAL FUTURE! Instead, treat yourself to credit counseling from a trusted source!