How To Spot A Credit Repair Scam

When your credit score is low, it’s tempting to look for a quick fix — and that’s exactly what credit repair scammers count on. These fraudsters prey on people who are desperate to improve their financial standing, offering promises that sound too good to be true. Unfortunately, they often are. Knowing how to recognize the red flags of a credit repair scam can protect you from financial loss, legal trouble, and even identity theft.

Here are the warning signs of a credit repair scam:

1. Upfront payment
Under the Credit Repair Organizations Act (CROA), credit repair companies are forbidden to request or receive payment until they’ve completed the services they’ve promised.

2. Big promises
Scammers may claim they can remove negative information from your credit report, even information that is accurate and current. Don’t believe them; no one can do this. They might also promise to boost your score in just a few weeks. This, too, isn’t true. It takes at least 30 days for changes to be evident on your credit report.

3. Offers a “new credit identity”
In these scams, companies promise to create a new credit identity for a fee. After you pay, the company will provide you with a nine-digit number. They may refer to this number as a CPN – a credit profile number or a credit privacy number. Alternatively, they may direct you to apply for an EIN – an Employer Identification Number.

The company instructs you to use this form of ID to apply for credit, telling you it is legal. However, it’s not — and you’ve just been scammed. These companies are selling you a stolen SSN. They walk away with your money and leave you in hot water because you’ve just committed multiple federal crimes.

Falling for a credit identity scam could mean facing fines or prison time.

4. Tells you to dispute accurate information on your credit report
Disputing accurate information on your credit report is illegal.

5. Evasive when questioned
The Credit Repair Organization Act made it illegal for credit repair companies to lie about your rights and their services. These companies must explain:

• A written contract detailing your legal rights
• Your three-day right to cancel the contract without charge
• The anticipated time it will take until results are evident
• The total cost you will pay for their services
• Their guarantee

Credit repair takes time, patience, and legitimate strategies — not shortcuts offered by shady companies. If you suspect you’ve been targeted by a scam, don’t stay silent. Report the fraud, seek legal advice if needed, and take steps to rebuild your credit the right way. By staying informed and cautious, you can protect your financial future and help others avoid falling into the same trap.