4 Ways to Detect a Credit Repair Scam

The Federal Trade Commission (FTC) enforces consumer protection law and has the responsibility of protecting you and me against unscrupulous companies that attempt to get our business through false claims and, quite simply, by breaking the law. With regards to credit repair scams, practices like these became so common that Congress passed a federal law to clearly outline how credit repair organizations can operate. The Credit Repair Organization Act (CROA) was passed to protect consumers and provide them with recourse if they are victimized by a dishonest credit repair provider.

When researching credit repair companies, there are some glaring red flags alerting you to steer clear. According to the Federal Trade Commission, avoid services that:

Request Payment Before Credit Repair Services are Performed - Credit repair companies should not require payment prior to services being rendered. Under the Credit Repair Organizations Act, these credit repair companies cannot require payment until after they have completed the services promised. This is to protect people from companies that take large upfront payments and then do not perform the agreed upon work.

Do Not Disclose Your Rights - Legitimate credit repair organizations will inform you that you have a right to order one free copy of your credit reports every 12 months from the credit bureaus, and that you can dispute questionable items on your own. If you are not provided with this information, specifically in the form of a CROA required disclosure titled "Consumer Credit File Rights Under State and Federal Law", take your business elsewhere.

Endorse Using a New Identity - Some sketchy credit repair companies will actually go so far as to advise you to create a new credit identity by using an Employer Identification Number (EIN) in place of your Social Security number. This is a serious crime and if anyone suggests this as an option, run the other way.

Lie About Services They Provide - Be wary of credit repair companies that guarantee to remove negative and accurate items, such as liens and foreclosures, from your credit file. No one can guarantee that items will be removed, particularly if the items are true.

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Serving clients for over 18 years, Lexington Law prides itself on operating in strict compliance with the laws governing credit repair companies. Lexington Law's credit repair services have assisted clients with the removal of millions of negative items including late payments, collections, charge offs, and bankruptcies.

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