5 Common Credit Repair Scams to Avoid!

Are you constantly reading or hearing about promises to magically erase your bad credit overnight? What these “experts” don’t let you know is that you will either be overcharged, involved in illegal activity or actually be put in a worse financial situation. Please read further to learn more about 5 of the most common scams.

1) The “Escrow Account” scam is a huge problem. These fix YOUR credit companies promise to pay your creditors from the money you pay to them. They keep this money in an escrow account where IT supposedly grows. The idea is that the company will let your money sit in this account until it matches the amount owed to the creditor and then they will pay on your debts. This is where the problem lies: The credit repair company will automatically remove some money from the account to pay administrative fees while your creditor is put on hold causing your credit to continue charging you interest until they start legal action against you. This is actually damaging your credit rating even further.

2) Many advertisements are by companies that promise fast or instant credit repair, no matter how bad your credit history is. You have to be honest with yourself here, no company can possibly deliver on this promise. You should know that it may take months, even years to fully repair your bad credit.

3) How about the credit repair representatives that pressure you into signing a contract without reading it through. At this point red flags should go up and if you’re really feeling pressured, simply advise them that you would like your attorney to read the contract first. Their reaction will help you determine if it is a scam. A legitimate service would not have any problem with your request.

4) Never do business with a company that asks for money up front without telling you what you are getting. Read the fine print for any hidden fees and be wary of credit repair companies that will charge you for steps which you can do on your own for free such as creating a budget.

5) There may be credit repair companies which will advise you to falsify your information on a loan application or even suggest a new identity. Not only is this immoral but it is illegal. If this is ever suggested to you, the authorities should be contacted. The last thing you need above your credit problem is a legal problem.

If you are in a serious credit crisis right now, get the advice of a close relative or friend to steer you in the right direction. You may be in an emotional and desperate state and may not be able to make an informed decision with a clear head.

Once you get good advice and more knowledge, fixing your credit history and raising your credit score will be easier than you imagined.

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