Common Credit Repair Scams


With so many people who are looking for credit help after they have been forced to declare bankruptcy, there are many more people who are willing to capitalize off of them. You can find literally thousands of different advertisements online and elsewhere that promise you credit repair and not all of them are legal. I used this section to help address the most common credit report scams so that you can be forewarned. Lets look at them now!

SCAM #1
Getting a New Social Security Number Many people are only allowed to have one Social Security number. It is against the law to use a different Social Security number to create a false identity. However, many criminals will offer this service to you for a fee. The thing is that since it is illegal, you are in for quite a bit of trouble.

Not to mention, nobody ever seemed to wonder just where these SSNs come from. It is most likely that you are paying for a stolen identity. It is a perfect scam in that the thieves get the money for the transaction, and you will be the person that gets caught for scamming the SSN. It is quite brilliant, but many people fall for it. Even if they claim that this transaction is completely legal; IT IS NOT!!!!

SCAM #2
Getting a Federal Employer Identification Number (abbreviated as EIN or FEIN) This is basically nothing more than a file segregation scam. For this scam, the criminals claim that you can obtain a federal tax ID number, as if you are a business, and end up with a clean credit record that is listed under that tax ID number. It is against the law to use an EIN to set up a false identity as well. Let me also tell you that a new credit report under an EIN will not even show a credit history. It is unlikely that a creditor would regard a new business with no credit history as a good credit risk. So it is also a waste of time.

SCAM #3
Challenging Everything Bad on a Credit Report As I stated before, this is simply stupid. All credit agencies have to keep accurate records of negative entries on your credit history for up to seven years, and to keep records of any bankruptcies for as much as years. Sometimes truthful negative information may be reported beyond those time periods, but it is rare. You cant report false negatives on your credit report without suffering some consequences. If you are caught filing false claims, you could be in much trouble. I will say that this is a brilliant tactic though, and basically hard to prove a negative report claim knowingly took place.

SCAM #4
Clean Credit Scam- They claim that they clean your credit fast and use their contacts to get you a mortgage (or credit card or loan). This is one of the more recent credit repair scams and coincidentally it is also one of the most expensive. Con artists dangle the promise of needed money or loans in front of desperate consumers as an incentive for the consumer to pay them up front fees that never seem to end. Some of them actually claim to legit credit counseling agencies, while others imitate mortgage companies.

And since there are genuine community nonprofit groups that really will help to teach the consumer and help them to find affordable mortgage loans, scammers may also try to imitate this. Any reputable community-based organizations will tend to focus on education, and they don't charge pikes of money to do it. They also work with lenders and government agencies you should have already heard of and are able to prove it.

SCAM #5
Scam No. 5: The 900-number for details on how to fix your credit.
This is a pitiful scam but it is still effective, and is often combined with any of the others mentioned above. While you are looking for help, the con artists are looking to keep you on the line as long as possible and make money from the per minute charges. It is just like every other 900 number scam. However this one is also easy to spot and work through.

Scammers are often vague on details when they are talking to you on the phone. If you have trouble defining, understanding or explaining their proposed plan for cleaning your credit, that is a clue that it is a scam.

You should also watch out for any offer of guaranteed credit with these numbers as it is almost certainly to be a fraud. This is the same thing with anyone who claims quick fixes. You should really be on the look out for nameless, faceless so called credit repair companies.

Legitimate counselors will usually want a face-to-face meeting to go over all your financial details with you and they will also spend a great deal of time in trying to educate you on the process and how it really works. Here are some important questions that you need to ask, if you want to be sure that you are not dealing with a scammer:

Who is coming up with the plan, and who can I speak to about it?

Has this company had any problems before? You can find out by calling your state's regulatory or consumer offices to see if there are any complaints or actions being taken against them. Don't forget to check with the company's home state if you have to, and to run the business and names of the companys main executives through a couple of search engines.

How are they paid, how much and when do they get their payment? Since you can do your own credit repair for free, this is why you should ask. It may be more beneficial to do it yourself. You should want to go with an organization that is affiliated with the two main nonprofits, the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. They will help you for a small fee that is nowhere near the hundreds.

What's the downside of this plan, if any? Any real credit counselors are careful to present the positives and negatives behind any plan. When they are scamming you, they will ignore the bad side and focus on the upside.

Did you contact them or did they contact you?

Why arent you doing it for yourself?


I should also note that you should not be told to make payments for you credit report. You're entitled to receive a free copy of each of your credit reports every year. Watch out for sites and services that are trying to charge you for it, or for those who try to charge you for your credit report when you opt for their credit monitoring service.

Your credit report will not change no matter what is claimed and many scammers will tell you that you are to pay for the entire report but can get a portion of it for free. The fact that many say this is disturbing, but it happens every day.