When you’ve got a low credit score, it can be difficult to do…well, just about anything that adults do. It’s hard to obtain a loan or a credit card, making it difficult to make big purchases like a car. It can even be difficult to find a place to rent, and some employers even look at your credit report during the interview process.
It’s because of this that many people with less than perfect credit feel desperate. That desperation causes many online companies to prey on folks with low credit scores, offering them all kinds of services and scams they claim can miraculously repair your credit in no time.
Well, if it sounds too good to be true, it probably is. While there are certainly services out there that can help you improve your finances and build your credit, many of the services online offering to give you a credit 180 will take your money and run. Here are the top ways to spot a credit repair scam on the internet.
- They make incredible promises.
Outrageous claims are almost never true, especially when it comes to repairing your credit. If a company tells you they can increase your credit score by hundreds of points instantly, or even in a matter of months, it’s probably not true. A legitimate credit repair service will be up-front and realistic with you about the time and diligence it takes to rebuild credit, even if you are using a credit repair service.
- They make specific promises before speaking with you.
Credit building is personal. Everyone’s credit report is different. If a company promises you that they can improve your credit score by a certain amount or within a specific time frame before they’ve even spoken to you about your particular circumstances, they are probably lying. In fact, if they promise to raise your credit score by a specific number even after speaking with you, be wary. Credit building is not completely transparent, and it is impossible to calculate exactly how much your credit score will go up given a certain set of behaviors. Legitimate credit repair services may quote a range that your credit score will likely reach or promise that it will improve without being able to say exactly how much.
- You aren’t given the proper paperwork.
All credit repair agencies are required by law to go through a certain process before providing their services. They must give you a copy of the “Consumer Credit File Rights Under State and Federal Law,” which details your rights in regard to your credit report. They should also give you a copy of the contract to look over and sign before proceeding. Make sure you read it carefully. You should find in the contract the amount you agreed to pay and the services they agreed to perform, as well as the timeline for the services that you both agreed to. If they don’t give you these things, it’s probably a scam.
- You’re asked to pay up front.
Credit repair services should never ask you to pay before they perform any services. In fact, it is illegal.
- You’re told not to contact credit reporting companies.
It is your right to contact the credit bureaus and monitor your credit report. You should be the person making contact with TransUnion, Equifax, or Experian to get your own information, not them.
- They promise to remove accurate information from your credit report.
If they promise to remove a bad mark on your credit report that you know to be accurate, it is a scam. If they ask you to dispute an item on your credit report that you know to be accurate, it is a scam.
- You found them through an untrustworthy source.
While it is actually possible to be scammed by a service that appears to be fully legitimate on the surface, many of these credit repair scams market their services in questionable arenas. Consider where you first heard about them. Was it through a personal referral you can trust or a reputable website, or did they come to you at random? On the internet, scams are often marketed on unmoderated websites, boards, or discussion areas like Craigslist and the comment section of personal finance blogs. Do not follow links you see in comments sections or message the user directly. They may also get ahold of your email address and market their services directly to your inbox – do not respond to unsolicited emails.
- They ask you to provide false information.
Believe it or not, some credit repair scams will ask you to go so far as to use an alternate social security or employer identification number. They give you this alternative identity to use on credit card applications. While some scammers are good enough to convince their clients that this is somehow done in a fully legal manner, this is illegal. It is fraud.
How to improve your credit score on your own
It is completely possible to improve your credit score all on your own. While you likely won’t see a huge jump in a small time frame, if you follow credit rebuilding best practices, you will see a steady ongoing increase in your credit score.
The first step is to make sure that you know your exact credit score and everything on your credit report. Pull a credit report for yourself and go through any of the bad marks on it. Make sure that they are accurate.
If you notice something on your credit report that is inaccurate, dispute it. Once you’re sure that your credit report is accurate, sign up for credit monitoring services. Your bank or credit card may offer these services, and usually they are free.
Finally, get a credit card that is good for rebuilding credit. If your credit is poor, you will probably need a secured credit card. While these credit cards do not offer great rates and often come with fees, they are designed specifically for people who are trying to rebuild their credit. If your credit is fair or good, you can consider unsecured credit cards that are good for building credit. Of course, pay all your bills on time and don’t forget to return those library books – every point counts. In fact, even signing up for rent reporting can help bump up your score a little.
In the end, your finances are yours and yours alone. You should never hand over your financial future to someone you are not 100% sure that you can trust.
