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Credit Repair Scam

Sarah Edwards | May 15, 2023

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: If you’re seeking ways to improve your credit score quickly, you may come across companies that claim they can increase your score by 50 or 100 points in no time flat. Most of these companies are shams. SoloSuit explains what to know about credit repair scams.

A bad credit score can make it difficult to do anything involving a loan or credit extension, including renting an apartment, qualifying for a mortgage, or obtaining a credit card. Sometimes, bad credit can even prevent you from getting a job.

When people find themselves in the unenviable position of needing something but having a poor credit score, they sometimes turn to credit repair companies for help. However, most credit repair organizations are scams. They offer quick fixes that usually don’t work, all at an additional cost to you.

How to recognize a credit repair scam when you see one

There is one bright-red flag to look out for in a credit repair scam: a fee in exchange for “fixing” your credit.

No one can repair your credit except you—not your mother, not your best friend, not the guy you saw online peddling an extra 50 points to your credit score if you pay him $100. Repairing your credit isn’t a transactional exchange. Unfortunately, you can’t pay to fix it; you must build it yourself.

Think of your credit like a paper you wrote for a class in high school. You could expect a decent grade if you worked hard on your paper, performed the proper research, checked for grammatical errors, and ensured it met all your course requirements.

However, if you waited until the last minute and threw together a paper with no research and lots of mistakes, your grade would probably be pretty poor.

Similarly, you can’t wait until you need something to fix your credit. You won’t see a 100-point improvement to your score if you suddenly pay a bill; instead, you’ll need to consistently make payments over several months.

The Federal Trade Commission has a report on credit repair scams over the last twenty years. Before entering into an agreement to pay for a credit repair, you should read about these cases and see if you find any similarities to your case.

Have you received a debt collection notice in the mail? Make the collection agency validate your debt with SoloSuit’s Debt Validation Letter.

Check your credit report regularly for mistakes

Aside from paying your bills on time, you’ll want to monitor your credit report for negative marks.

You can obtain copies of your credit report for free on the AnnualCreditReport website. Under federal law, all three credit reporting bureaus must give you a free copy of your credit report annually. However, due to the COVID-19 crisis, this site allows you to request your credit report weekly.

All three credit reporting bureaus, including TransUnion, Experian, and Equifax, offer credit monitoring services that notify you if there’s a change to your credit score. The cost for credit monitoring varies, but typically you’ll pay an annual or monthly fee for their services.

A negative mark, like a late payment or a collection item, can drop your credit score by 30 to 100 points. If you see a change in your score, it’s critical to investigate the cause immediately. If you disagree with the item, you can contact the company that made the report or dispute it directly with the credit reporting bureau.

Let’s consider an example.

Example: Sandra is planning to buy a house soon, so she signs up for a credit monitoring service to learn about her current credit score and get notifications if there are any changes. Sandra currently has a score of 650, which she hopes to raise to 700 in the next six months. Sandra’s making diligent, timely payments to her creditors. One day, she receives an alert that her credit score dropped by 30 points. A creditor reported her payment late, but Sandra knows she made it on time. She disputes the item with the credit reporting bureau, providing a copy of her payment receipt as evidence. The creditor confirms the report was a mistake and requests its removal from her report. Sandra’s credit score goes up by 30 points afterward.

In our example, the creditor made a mistake, causing Sandra’s score to drop. She wouldn’t have known about the error if she hadn’t paid attention to her credit score. The unknown error could have made it difficult for her to qualify for the mortgage she’ll need when she buys a house.

Remember, no one can fix your credit but you

A credit repair company will take your money, but there’s no guarantee you’ll see any results from its efforts. In the worst cases, it will take your money and skedaddle. If you’re considering hiring a credit repair company to fix your credit, put your money toward something that will give you more value, like paying down your open credit lines.

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