How far would you go to improve your credit score? How hard would you work? Who would you trust? After the recent Equifax disaster—in which hackers compromised the private information of 143 million people—a swath of consumer-credit rectification services have cropped up. The process of determining which of those providers are legitimate credit repair companies seems daunting—especially for those whose distrust around credit has piqued.
Unfortunately, the credit repair industry is rife with organizations looking to scam consumers desperate to clean up their credit. According to a survey by the Federal Trade Commission, an estimated 1.7 million Americans fell victim to credit repair scams in 2011. The Equifax breach will likely lead to several million more cases. But fear shouldn’t stop you from taking steps toward improving your credit, and there are several credible agencies ready to help.
With the following four pointers and some healthy skepticism, you’ll be able to fix your credit and spot scammers long before you have the chance to fall victim to their schemes.
Their reviews are either horrible or a little too good.
Learn from the mistakes of those who came before you. A quick web search can offer insight on the range and worthiness of credit repair companies—and customers’ thoughts are vital to your assessments of different service providers. Reviews will help narrow your options, weeding out those that have terrible reviews.
Keep in mind, though, that good reviews should be taken with a grain of salt. Some companies self-author shining commentary or pay others to write fake reviews to appear reputable. The practice is illegal, but a credit repair company bent on scamming people for their money can’t be expected to operate ethically.
Their promises are too good to be true.
You’ve undoubtedly heard the crow of the “best credit repair companies” on TV or the radio touting their quick results in the credit repair process, promising impossible goals like “Raise your credit score by 100 points immediately!” While this would be incredible, credit repair doesn’t happen overnight. Credit restoration isn’t a magical undertaking—it marks the first steps into the overhaul of your financial lifestyle and an awareness for your spending, budgeting, and saving habits. Any company advertising themselves on the platform of quick returns isn’t looking out for your best interests.
They ask you to pay upfront.
Generally, it’s never a good idea to pay for a contracted service upfront, and the same goes for credit repair. In fact, the Federal Trade Commission lists this as the number one red flag on their consumer information webpage. It’s illegal to ask a consumer to pay for any credit work done on their behalf before the job is complete, and any legitimate company will never do this. Instead, look for credit repair companies that are willing to go through the credit repair review process with you slowly.
They tell you to avoid creditors or to provide false information.
Credit repair companies can help you navigate the process on the basis of certain standards and criteria. Credit reports must be entirely accurate, fair, and supported by evidence. An illegitimate credit repair service will attempt to sidestep these practices by telling you to avoid communicating with your creditors and credit-reporting companies. They might even ask you to fabricate false information on future credit applications, which any reasonable person should write off as a seedy action.
“No one can make bad credit items just disappear,” said experts at Lexington Law. “A good credit repair company will operate truthfully and ethically within the legal boundaries in hopes to improve your credit score. Laws have been created to protect the consumer in events of credit dispute, and credit repair companies know how to leverage these laws to produce results for their clients.”
Not every credit repair company is out to scam consumers. There are many established and reputable companies in the industry that can help you make sense of the confusing and frustrating process of rebuilding your credit. While it’s not always possible, the best protection against having to deal with credit restructuring is to manage your finances responsibly.