How to spot a credit repair scam
When you set out to repair your credit, be on the lookout for scams that could cost you in time, stress and legal fees.
By now, you’ve probably noticed that your credit score comes into play whenever you’re making big financial moves — whether you’re applying for a mortgage, buying a new car or qualifying for a loan. If you have a low credit score, you might be having a hard time getting approved for any large loans or purchases, which can make credit repair an alluring idea. However, many companies that claim to help with credit repair or offer a “new credit identity” are scams that could leave you in a worse position than when you started. Here’s how you can spot a scam before it’s too late.
What is a credit repair scam?
A credit repair scam usually starts with a company offering to “fix” your credit score, usually through advertisements online or in the mail. Often, these companies will ask for a fee up front, and once you’ve paid it, you never hear from them again. If you give them your Social Security number, they can sell it to other companies illegally. Some scams will offer a “new credit identity,” claiming they can help you start fresh with a new SSN. If you use an SSN other than your own when you apply for a loan or line of credit, you could end up facing steep fines.
What are the signs of a scam?
Here are some telltale signs a credit or loan company isn’t legit:
How can I actually repair my credit?
There are ways you can improve your credit over time without putting your financial standing at risk. Educate yourself on what goes into a credit score, and address each component when and where you can. Paying bills on time and making a plan to pay back credit card debt is a great place to start. Once you’re out of debt, keep your credit utilization low. If the amount of debt you’re dealing with is overwhelming, consider consolidating your debt. Repairing your credit takes time, but doing it right keeps you and your money safer.
Find more resources on establishing credit to build your history and be ready for credit when you need it.