Credit Repair Scam Warning Signs
11 August 2006Continuing on the theme of how to avoid being scammed by a credit repair agency, you should look for several warning signs that indicate it might be a flight-by-night business:
1) Never pay up front. It is actually illegal for a credit repair organization to receive money from you prior to the services being rendered. The Credit Repair Organizations Act places restrictions on what they can do, and it provides:
No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
So if they’re asking you to pay up front, it’s a bad sign that they don’t care about what the law says.
2) They advise you to try to set up a separate credit report or use a different identity. Again, that’s illegal. The same Act provides in part that it is illegal to:
make any statement, or counsel or advise any consumer to make any statement, the intended effect of which is to alter the consumer’s identification to prevent the display of the consumer’s credit record, history, or rating for the purpose of concealing adverse information that is accurate…
3) They ask you to sign a contract before showing you a written statement titled: ‘Consumer Credit File Rights Under State and Federal Law’. Again, this is a legal requirement. They can’t enter into a contract with you without showing you this statement - it’s a pretty lengthy statement that shows your exact rights, and the Credit Repair Organizations Act requires it to be worded a certain way. If you never see that document, you’re dealing with someone shady - don’t sign anything if they don’t VOLUNTARILY show it to you. Don’t ask for it - use it as a warning sign. If they give you something to sign before giving you that document, say no thanks and walk out.
4) They don’t want to give you 3 days to cancel. You’ve got a legal right to cancel any credit repair services you agree to within three days. Ask them about it specifically. If they try to give you some line about how you can’t, you don’t want to deal with them.
5) Listen to your gut. Are they promising you something that sounds too good to be true? Don’t you remember what your parents used to tell you about things like that? Well, it was good advice. There is a limit to what credit repair agencies can legally do for you. If you ruined your credit, no one is going to be able to miraculously make those problems go away. If the credit repair agency is telling you that you should be paying debts on time, using well-accepted “tricks” like having a credit card and paying it off each month, and managing your money well - then they’re probably the real deal. If they’re telling you that everything will be OK if you report to the agencies that a Guatemalan coffee farmer has stolen your credit and then set up a Reverse Interdict Abraham Lincoln Trust in the Canary Islands to manage your funds, you should probably be a little suspicious. Scams usually sound like schemes.
You can read up on the Credit Repair Organizations Act here, which outlines many of your legal rights.
Discuss this on the Free the Drones Financial Forums here.
3 Responses to “Credit Repair Scam Warning Signs”
August 21st, 2006 at 8:09 am
[...] Free the Drones Blog presents Credit Repair Scam Warning Signs posted at Free the Drones. [...]
October 8th, 2006 at 1:13 pm
Excellent article, hopefully people will be more cautious when it comes to credit repair. As a mortgage professional I run into people daily that fall for these scams. Credit repair just takes persistance and common sense.
October 9th, 2006 at 4:44 pm
great resource…keep it up=)keep providing relevant information to people.