Everyone wants a great credit score, but sometimes, those three little numbers need some help.
Your credit score is a number that you get from credit reporting bureaus. If you’re late with credit card payments, default on a loan, miss car payments or otherwise struggle financially, your credit score will go down. If you pay all your bills on time, your credit score goes up. Companies use your credit score to predict how responsible you are, financially.
A low credit score can affect your life in a lot of ways. People with higher credit scores may find it easier to get loans at lower interest rates, for example.
Here’s the reality: All the things that these credit repair companies do are things you could do yourself! (And you can learn a lot more about this in our free webinar "Using Credit Wisely" at noon on Thursday, February 15. Or, you can make an appointment for free credit counseling with our certified financial experts!
However, if you choose to use a credit repair company, here’s how to make sure you’re getting what you pay for!
Not all credit repair companies are legitimate. Here’s how you can protect yourself from falling victim.
How these scams play out
There are several variations of the credit repair scam, and none of them end well. Here are the most common forms of this scam:
- The “credit repair company” asks you to pay for services, but gives nothing in return.
- The company takes illegal action to improve your credit score. This can involve filing a false police report or claiming identity theft. Of course, you will be held accountable for the crimes committed in your name. Some companies will even have the victim take illegal action on their own, such as creating false fraud statements or lying about their credit history.
- The company directs the victim to set up a credit privacy number (CPN) or an employee identification number (EIN) to start building credit anew instead of using their Social Security number (SSN). Unfortunately, though, this number is likely someone else’s SSN. The companies poach these numbers from individuals who are not actively using them, such as children, seniors and prisoners. This is, of course, illegal and could land the victim in jail.
Protect yourself
Look out for these red flags in credit repair companies to avoid getting scammed:
- Charges steep upfront fees.
- Promises to help consumers reach a specific credit score in a set timeline.
- Fails to mention you can dispute credit report errors at no charge.
- Suggests that you falsify information in any form.
- Recommends that you set up a new identity through a CPN or EIN.
- Lack of proper accreditations, street address and positive business ratings.
- Refusal to work with your creditors and the credit report bureaus.
- Offers to sell you a tradeline or authorized user account.
- Lack of an official contract outlining all terms and conditions.
If you do want to enlist the services of a credit repair company, look for a company that does not exhibit any of the above behaviors. You’ll also want to look for a company with reputable accreditation and a detailed contract that shows a clear plan for how it will repair your credit and its payment structure.
It’s always a good idea to try increasing your credit score, but don’t let scammy credit repair companies make things worse!
Call CommonWealth One or stop by a branch. We’re happy to help you repair your credit and get on the path to better financial health!
