As household debt in the U.S. soars to record highs and bankruptcy filings are on the increase, credit repair companies continue to thrive. While claiming to have all the answers, many outfits pose more questions for consumers victimized by their unethical and illegal tactics.
The sales pitch focused on cleaning up your credit report sounds good. Yet, oftentimes the information they provide on their services is misleading and inaccurate. They make promises of a clean credit record so you can secure a car loan, home mortgage, insurance or a job.
In far too many cases, those promises to improve financial fortunes disappear once the fee is collected. In some cases, the companies vanish as well. All consumers have to show for their investment is an unchanged credit rating.
Know The Signs Of A Scam
During the initial meeting, it is important to look for “red flags” that range from ill advised to illegal. Those may include:
- Upfront payments before services are provided
- Information on legal rights or do-it-yourself options
- Promises to remove negative information
- Inventing a “new” credit report by applying for an Employee Identification Number instead of a Social Security Number.
- Encouraging the act of “piggybacking” or being added as an authorized user on the credit account of someone with a good history of timely payments
Know Your Rights
All consumers have the right to the following when dealing with credit repair companies:
- Total costs and explanation of guarantees upfront
- Three-day window to cancel without any charges
- Estimated time frame to get results
The tactics of many credit repair companies often leave consumers with more problems than solutions. Problems can take the form of criminal prosecution if they follow the unethical advice of credit repair companies to commit fraud.
Consumers may find themselves with a criminal record equally hard to repair.