BBB Scam Tracker has received numerous reports lately from consumers targeted by credit repair scams.
You may get a phone call or see an ad for a company that claims it can instantly repair your credit. If your poor credit rating has been holding you back, you may decide to give it a try.
You contact the company and they promise to remove past credit mistakes, such as late payments or a bankruptcy, from your credit report. Or they may even offer to give you a new credit identity.
The BBB is urging consumers not to fall for these scams.
Scam credit repair companies may also try to persuade you to contest accurate information on your credit report. Othersurge you to apply for a new ID number (typically one used by businesses for tax purposes) or provide you with a stolen Social Security number and tell you to apply for the loan with the new number. Such tactics are illegal.
Not all businesses promising to help you repair bad credit are scams. BBB suggests watching for the following warning signs:
- You are asked to pay in advance:In the US and Canada, credit repair companies can only collect their fee after they perform the services promised.
- The company promises to remove negative information from your credit report.If the information is accurate, no one can remove it.
- You are urged to get a new credit identity. In the US, some scam companies will ask you to apply for an Employer Identification Number instead of using your Social Security number. Misrepresenting your SSN is a crime.
- Beware of contract red flags. Make sure you sign a contract and that it contains the terms of your agreement, including the price, the time period and the services to be performed.
- Know you can cancel. If you signed up for a credit repair service and it looks suspicious, you can cancel. In the US, you have three days.