How to Spot a Credit Repair Scam

When you're struggling with a low credit score, the promise of a quick fix can be incredibly tempting. Credit repair scammers know this—and they prey on vulnerable consumers by offering fast, easy solutions that often lead to financial loss and legal trouble. Understanding how these scams work is the first step in protecting yourself and your financial future.

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. Offer of 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 Social Security Number. They walk away with your money and leave you in hot water because you’ve just committed federal crimes.

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

If you’ve hired a credit repair company that hasn’t lived up to its promise, look into your legal options.

Finally, it’s best to report the scam to your local consumer affairs office or to your state Attorney General. You can also file a complaint with the Federal Trade Commission (FTC). File your complaint online at ftc.gov/complaint or call 1-877-FTC-HELP.

Credit repair takes time, patience, and legitimate strategies—not shortcuts that could land you in serious trouble. If you suspect you've been targeted by a scam, take action by reporting it and seeking trustworthy help. At Hudson Valley FCU, we’re here to support you with honest credit counseling and budgeting assistance. Stop by today and let us help you build a stronger financial foundation the right way.