Why You Should Be Skeptical of Credit Repair Companies

September 24, 2019

We’ve all seen television ads that offer “credit repair” or “a new credit identity” in just a month or 90 days, or some other seemingly too-good-to-be-true timeline. The fact is, if you have poor credit, you’re not going to be able to repair it in a month’s time. Poor credit can take years to repair, but by taking the right steps to avoid credit repair scams, you’ll ensure that you’re not losing money and progress to an illegitimate entity. Here’s why you should be skeptical of credit repair companies.

You Can’t Repair Your Credit Overnight

No matter how knowledgeable the credit repair company is in credit history and repair methods, you cannot repair your credit entirely in just a few weeks, or even months. A variety of factors can affect your credit score, including defaulted payment, your payment history, late payments, credit diversity, credit age, and more. All of these factors couldn’t possibly be addressed in just a few weeks’ time.

Credit repair is more likely to take several months to several years, depending on the damage. If you’ve simply got a poor payment history, you can work to ensure you’re always paying on time from now on, or if you have a poor credit mix, you can open another credit card account to diversify your credit.

Don’t make the mistake of thinking that there’s a “magic” fix for poor credit. The fact is, you made poor decisions with your finances that left you with a poor credit score, and that’s ok. Just remember that no one can come along and wave a magic wand and make your credit score 800. 

Companies That Demand Upfront Payment

Some credit scams will demand large sums of money upfront before they begin “working” on repairing your credit. This is usually a good sign that you’re being scammed, and that no true work will occur. Credit repair companies usually require an upfront payment, and even if they don’t manage to repair your credit as they promised, you’ll be hard-pressed to get that money back.

A reputable credit counselor will work with you on an as-needed basis, working to address the issues affecting your credit and charging a reasonable hourly rate or retainer fee. You’re much more likely to see results from one of these professionals than with credit repair businesses.

Credit Repair Scams are Common

Of all the scams out there, credit repair scams are pretty common. Anytime you’re giving away personal information like your SS number, addresses, phone numbers, and full name, you’re taking a risk. Taking a risk with a credit repair company is usually a poor gamble, as some of these companies have even been found to be operating in illegal practices like identity theft or other forms of fraud.

If you truly need help getting your credit back on track, start with a financial advisor or planner. These professionals will help you narrow down your most impactful expenses and where your income goes each month for a better idea of how to improve your financial standing. You can compare the 5 best financial advisors in San Diego on the Careful Cents site.

If They Tell You These Things, It’s Probably a Scam

Pay close attention to what credit repair companies say. There are a few things you’ll want to watch out for, including “pay upfront” demands and others. For instance, if a credit repair company tells you to obtain an EIN (employer identification number) from the government in order to hide your poor credit history, you’re treading in dangerous waters. This practice is illegal, but it is a common suggestion from credit repair companies.

If your credit repair company tells you that you shouldn’t contact the three credit bureaus directly, there’s a reason why. You have the ability to contact these agencies anytime you wish, and if someone tells you that you’re not allowed to, do not do business with them.

 Watch out for another common practice, which involves you obtaining what credit repair companies call a “Credit Privacy Number” or a CPN. While the terminology might sound legitimate, the practice is not; and involves the company providing you with a number that is essentially a fake social security number. This is also incredibly illegal. 

Take the Time to Work With Credit Counselor

 If your credit is truly in shambles, you’ll want to invest your money in the right place to get it repaired. Damaged credit can prevent you from securing funding when you most need it, and even things like mortgages and car loans can be out of reach for those whose credit is less than perfect.

Working with a legitimate credit counselor will help you identify the habits that are detrimental to your credit score, as well as the things that are keeping you from obtaining a higher score. Credit counselors are certified, trained, and very knowledgable in the area of credit repair, and a much better idea than falling in with a credit repair business.

Conclusion

If your credit is already suffering, it’s a bad idea to get entangled with a credit repair scam. You’ll wind up losing money and your shot at improving your credit. The lump-sum you have to pay upfront could be enough to leave you financially destitute, and you can be sure you’ll never see it again; even if no service is ever done to your credit. Stay away from credit repair companies, and instead, trust your local credit counselors or financial planners for credit repairs.

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