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Credit Repair Scams And How To Avoid Them

Add years of good credit to your report, overnight! Fix your bad credit! Avoid bankruptcy, call our service today!

We have all seen the advertisements, but are they too good to be true? Of course, anything that looks too good, probably is a credit repair scam.

Credit repair scams fall into two categories: overnight fixes and payment services.

The first option offers an overnight fix for bad credit or lack of credit history. This fix is actually a glitch in the credit reporting system. For a fee, you will be added to a dummy account as an authorized user. The actual account owner will have years of good credit, which would transfer over to your credit history. Some accounts could have thousands of these “authorized users,” but none of them would have access to a single real dollar.

FICO and the credit bureaus continue to work diligently to close this loophole because it creates an unfair representation of your actual credit history. When you get caught, your report will be brought back to normal. Notice I didn’t say, “If you get caught.”

If you have a friend or relative who is willing to add you as a joint cardholder (without actually giving you a card), you will be able to start building credit history and take advantage of good credit history on the part of your friend. This works much the same way as obtaining a co-signer for a loan. It’s a fast way to lose friends.

The second category of scam isn’t really a scam, but rather a credit repair service, that offers to help you clean up your credit. While it sounds like a good deal, it is very important that you understand exactly what you are buying, and use only established reputable organizations such as Sacramento Credit Repair.

These services, at least the reputable ones, generally require you to turn over all of your cards to your account representative for safekeeping. A repayment plan will be set up, and for a monthly fee, the repair service will make the payments to your creditors, paying off accounts in the most efficient way.

At least this is how it’s supposed to work. There are two ways this could go terribly wrong.

  1. Some credit repair services negotiate with your creditors to charge-off or buy down your credit for a lesser amount (while sometimes sticking you for the full amount). This WILL damage your credit score. At times, charge-offs and buydowns are the best course of action to avoid bankruptcy, but be aware of the consequences you may have. Ultimately, you will pay hundreds of dollars to service for something you could have done yourself anyway, and you may leave them with a credit score that is severely damaged.
  2. Scam artists may take your money and promise to pay your creditors and leave you stuck with the bill. Be sure to use a well-established organization (many of these are not-for-profit) and check with your creditors to be sure the bills are getting paid on time.

In conclusion, there are many ways to build your credit score, without falling victim to credit repair scams or overnight fixes. For the best credit score, make your payments on time to build a good credit history. Check your three reports for accuracy at www.annualcreditreport.com. It’s free.

 






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