Credit Repair Scams Prey On People Looking To Finance Large Purchases, Says Better Business Bureau

CHICAGO, IL – If you plan to finance a big purchase, such as buying a home or car, your credit score is important. Scammers know this. Consumers desperate to improve their credit score to get a better financing deal is the opening that scammers look for. The Better Business Bureau (BBB) warns people to beware of credit repair scams that don’t improve credit ratings and can lead to identity theft.

Here is how these scams works: You get a phone call or see an ad for a company that claims it can instantly repair your credit. You contact the company and they promise to remove past credit mistakes such as late payments or a bankruptcy from your credit report. They may even offer to give you what they call a new “credit identity.”

“Scam credit repair companies may try to persuade you to contest accurate information on your credit report,” says Steve J. Bernas, president & CEO of Better Business Bureau serving Chicago and Northern Illinois. “Others may urge 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. All these can be tricks to obtain your legitimate personal and financial identity information.

“If you get one of these phone calls, hang up right away,” states Bernas. “Never let pushy people persuade you to provide personal information over the phone.”

Watch out for the following warning signs:

• You are asked to pay in advance. In the U.S. 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 U.S., 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. If you are asked to sign a contract, make sure 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 Canada, you have 10 days, and, in the U.S., you have three days.

Consumers who have credit issues need to understand there is no quick solution to fixing the problem. While it can be done legitimately it will take time and a conscious effort to avoid late payments and to stick to a personal debt repayment plan.

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