Credit repair scams are rarely talked about but are unfortunately all too common. They prey on people who are struggling with their credit, promising to help them improve their credit score or remove negative items from their credit report.

All too often, these scams end up doing more harm than good. The scammers may take your money and do nothing to help your credit. In addition, they may actually make your credit situation worse by adding fraudulent information to your credit report or deleting good information from your report.

How to Recognize a Credit Repair Scam

Spotting a credit repair scam can be tricky, but there are some red flags to look out for. For example, beware of any company that:

• Promises to remove all negative items from your credit report
• Guarantees a certain credit score increase
• Asks you to pay for their services before they do any work
• Pressures you to sign up for their services before giving you time to think it over
• Doesn’t give you a written contract
• Asks you to lie on your credit application or other documents
• Tells you to create a new credit identity

Immediate Action Steps

If you think you may have been the victim of a credit repair scam, don’t despair. There are steps you can take to recover from the damage. 

• Keep all documentation related to the scam, including any emails, letters, or receipts. This will be helpful if you need to file a police report or take legal action against the scammer.
• If you provided financial information, like your credit card number or bank account information, contact your bank or credit card company right away. They may be able to help you cancel the transaction or get your money back.
• If you sent funds via gift card or money transfer, report the scam to the issuer. They might be able to help you stop the transaction. Find their contact information by visiting their legitimate website.
• If you provided personal information, like your Social Security number, you may be at risk for identity theft. Contact the three major credit reporting agencies – Experian, TransUnion, and Equifax – and place a fraud alert on your credit reports. This will make it harder for the scammer to open new accounts in your name.
• Consider talking to a credit counseling or credit repair specialist to get help repairing your credit. 

How to Report a Credit Repair Scam

Report all internet crime to the Internet Crime Complaint Center (IC3). The IC3 will review your report and refer it to the appropriate federal, state, local and international agencies if necessary. Also, File a police report with your local law enforcement agency. Many agencies have departments dedicated to cybercrime. They will also be able to refer you to other agencies who can provide assistance.

Keep in mind that taking action can be time-consuming and may not result in getting your money back. But, it’s important to report the scam so that the authorities can take action against the scammers and help prevent others from becoming victims.

How to Avoid Future Credit Repair Scams

Research any company you’re considering doing business with before signing up for their services. Check out their website and read online reviews. Be on the lookout for red flags, like guaranteed results or upfront fees.

Never give your personal or financial information to someone you don’t know or trust, specifically your Social Security number, credit card number, bank account information and login credentials. 

Don’t respond to unsolicited emails, texts, or phone calls from people you don’t know. If someone contacts you out of the blue and asks for your personal or financial information, it’s a scam. 

Be wary of offers that seem too good to be true. If someone promises to clean up your credit report or improve your credit score for a fee, they’re probably trying to scam you. 

Remember, you can improve your credit on your own by paying your bills on time, maintaining a good credit history, and using credit responsibly. There’s no need to pay someone else to do it for you.

Discover more about these types of scams by visiting our debt collection scams page.