There are millions of consumers with poor credit scores, typically the result of bankruptcy, foreclosure, or simply being overwhelmed by bills. Because of this, an industry centered around helping these people to get out of debt, consolidate their bills, and repair their credit has sprung up.
While some of these companies are legitimate, many of them are simply looking for a way to take advantage of consumers who are already struggling. Credit repair scams are most prevalent in communities where most people have little financial knowledge. Scammers also try to target certain groups,such as ethnic minorities, the elderly, and recent immigrants. This is because these groups are usually the least likely to report the scam to local law enforcement.
There are a few obvious signs of a credit repair scam, however. First, be suspicious of any company that offers to repair your credit for a fee, while insisting that there is nothing else you need to do. While credit repair used to be as simple as adding your name as a co-signer or authorized user to the credit cards of someone with good credit, Congress has closed this loophole. This means repairing your credit is a complicated process that will probably take several months to fix. It will also involve a lot of involvement from you. Any company offering to take care of it quickly is probably a scam.
Also be suspicious of any company that claims it can fix your credit and all you have to do is pay your bills on time. These companies can look legitimate because they tell their clients that the credit repair will take a year or more to complete, making it look as if the company is very involved. The truth is, however, that anyone who is paying their bills on time should see an increase in their credit score every six months, regardless of whether or not they paid a credit repair service.
Next, also be suspicious of any company that claims it can fix your credit and all you have to do is pay your bills on time. These companies can look legitimate because they tell their clients that the credit repair will take a year or more to complete, making it look as if the company is very involved. The truth is, however, that anyone who is paying their bills on time should see an increase in their credit score every six months, regardless of whether or not they paid a credit repair service.