When your credit score is down and you’re looking for any way to improve it, you’ll probably ask yourself is credit repair legit? Can this really be a legal way of fixing your situation? The answer is yes, but only if you’re using the right methods and services.
Credit repair is the legal right of any person, and there are plenty of legitimate credit repair companies out there who help people each and every day. Unfortunately, there are also companies who are trying to scam people. Today, I’ll show you how to avoid credit scams and properly repair your credit the right way.
How to Spot a Credit Repair Scam
Legitimate credit repair is available from all of the companies we feature here on DebtSteps. That being said, there are plenty of scams out there who are using illegal methods to repair credit and potentially get people in a lot of trouble. In other cases, they simply disappear off the face of the Earth and take people’s money with them.
Let’s take a look at how you can spot a scam in the making and run the other way before you find yourself in deep waters.
1. General Warning Signs
There are some universal signs that a company isn’t legitimate. Here are some red flags:
- They want money up front before any work is performed
- That forbid you from contact the credit companies directly
- They want you to dispute everything, even if it’s accurate
- They give you false information to provide on a credit or loan application
- They don’t inform you of your legal rights
2. They Promise a New Identity
One of the biggest signs of a scam is when a company promises you a brand new credit identity. The idea of a clean slate probably sounds amazing, but it is too good to be true. This type of credit fraud is a federal felony and usually involves using an EIN (employer identification number) or stolen social security number to apply for new credit.
Doing this causes the person involved to be part of identity theft with them knowing. It’s a very serious crime and not worth the potential time in prison you could face by being involved with such a scam. While credit repair is worth it, going this route is not.
Your Rights to Credit Repair
The Credit Repair Organizations Act (CROA) manages credit repair services and defines that they can and cannot do. This law is enforced by the Federal Trade Comission and requires credit repair companies to explain the following:
- Your legal rights in a written contract that also details their services
- Your three day right to cancel
- How long results could take
- The total costs
- Any guarantees they have
If they violate these things, or they try to scam you with one of the things outlined above, you can report them to the FTC and recuperate damages yourself. The best case scenario, however, is to simply avoid them altogether.
Be sure to check out our credit repair reviews to see which companies you can trust, and how they can improve your credit score. Is credit repair legit? Yes, but only when you’re dealing with a trusted company. Thankfully, we know which companies you can trust.