In your quest to improve your credit, you’ve got to make an effort to make all the right moves. There are companies that offer to help you repair your credit, but not all of them have noble intentions. Before you spend any time, money, or energy on credit repair companies that approach you seeking to help you with your situation, learn to recognize whether there’s a chance you’re being taken advantage of.
You’re Charged Up-Front Fees
Right off the bat, you should know that credit repair companies are not legally allowed to charge customers fees before any service has been performed. If a company tries to charge you anything before they’ve done anything, shut the operation down without hesitation. Even if a company isn’t aware it’s not allowed to charge you upfront fees, do you really want to entrust your credit score with a business that doesn’t do its due diligence?
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They Guarantee a Specific Point Increase
You may like the idea of knowing your credit score will increase by a certain number of points, but such guarantees shouldn’t be trusted. This is because for a credit repair company to make such a promise, it may have to strip your credit report of current or accurate information, which should stay right where it is. Such tactics are against a law and are likely to do more harm than good in the long run.
You Aren’t Made Aware of the Full Scope of Your Rights
Before you agree to anything a credit repair service offers, the company should give you a copy of the Consumer Credit File Rights Under State and Federal Law. Essentially, this lets you know you can order a free credit score check and request the removal of any inaccurate information on your credit report and update outdated information. What it boils down to is that you can perform the same services a credit repair company offers on your own rather than let them handle it for you.
You Don’t Receive a Copy of the Contract
A reputable credit card company will let you thoroughly review a contract before you agree to or sign anything, and you should insist on this in the first place. Even if the company does give you a contract up front, take out the time to read over every word of the contract, no matter how long it may be; you don’t want to inadvertently sign your life away or agree to a bad deal. If there’s anything you don’t understand in the contract, be sure you ask for clarity. Also, don’t hesitate to have a legal professional look over the contract to see that it favors you rather than the credit repair company.
You’re Instructed Not To Communicate With a Credit Reporting Company
Some credit repair companies instruct their customer to not contact credit reporting companies. Whatever the reason is for this, it’s a sign that you’re most likely dealing with a disreputable company. The credit repair service may be afraid that if you reach out to a credit reporting company, it’ll be found out for the fraud it is.
The Company Offers Immediate Results
Just as it takes time to ruin a credit score, it also takes time to build that score back up. Credit repair services that offer results that happen practically overnight cannot and should not be trusted. One reason for this is that while the credit repair company may immediately make a credit bureau aware of a discrepancy on your credit report, it will take the bureau anywhere from 30 to 45 days to look into that dispute. Until that happens, your credit score will stay right where it is.
You Don’t Have the Option of Cancelling Services
As you look over your credit repair contract, look carefully to ensure you’re allowed to cancel services. It’s against federal law for you to not be allowed to cancel your contract within three days of agreeing to the contract’s terms. With that in mind, it’s worth pointing out that truly upstanding credit repair services will give you the option of canceling with even more time than three days. If you aren’t satisfied with the service you’re getting, you should absolutely be allowed to cancel.
You’re Offered a New Identity
Rather than rebuild a crumbling house of credit, wouldn’t it be easier to start from scratch? There are credit repair companies that offer you a new identity in the form of a Credit Privacy Number or an Employer Identification Number. How this works is you’re instructed to use the Credit Privacy Number or Employer Identification Number on all your future credit applications rather than your own Social Security Number.
They Initiate Contact
You’re likely to feel better about a credit repair company that you initially contact rather than one that cold calls you out of the blue. To boost your chances of finding a good company, you’re better off with a list of government-approved credit counselors that you reach out to rather than a random caller who may be little more than a scammer.
Predatory credit repair companies prey on your desire to put yourself in a better financial position. Use the tips to better ensure you don’t become a victim or a statistic.