Home Loans and Support

Credit Repair Fraud

Credit can be an important tool for nearly every person out there. Some people take their FICO scores very seriously and do everything in their power to protect those precious scores with everything they got. But when the household finances go belly up, most likely their credit score will also go out the window.

Once people recover financially in the future, they attempt to start fixing things that were affected by their unfortunate set of economic circumstances. Bills start getting paid as they also try to make an amends with past debts that went bad when their finances or job were lost. They also start thinking about ideas on how to raise their credit scores as they contemplate possibly buying a home some day.

Where there are Americans dreaming about their futures, there is bound to be white collar crooks looking to make a fast buck and turn these dreams quickly into nightmares. In today’s lack luster economy, some down on their luck ex-professionals are searching for ways to pay their bills and many have entered the white collar crime world of credit repair fraud. It is no secret that financial fraud is everywhere today, the world of credit repair is certainly not immune to these scams. 

While there is no one single way to take someones credit from them, it often happens with kitchen top credit repair specialists who promise the world and often never deliver. These shady companies are often referred to consumers by other professionals when they are turned down for some type of loan. Often these professionals are paid kick backs by these firms as compensation for the referral.

One of the most common fraud schemes is for upfront payment.

You should NEVER pay for a service that you know little about, and have never dealt with before a large amount of money upfront. Legally, these credit repair services are required to give you a contract, disclosures, and three days to opt-out and request a refund. This is required by law, and if they do not follow it, they could be subject to fines and other penalties.

Here are some helpful tips from the FTC on spotting scams.

If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:

  • The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
  • The company doesn’t tell you your rights and what you can do for yourself for free.
  • The company recommends that you do not contact any of the three major national credit reporting companies directly.
  • The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
  • The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
  • The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.

If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.

If you are simply trying to contact a credit repair agency about a problem that you noticed on your credit report, then you can solve it yourself! The credit reporting agencies allow you to get a copy of your credit report if you find a mistake on it. Otherwise, you may have to pay a small fee. If you do find a mistake, you must dispute it in writing, but it should be removed. However, if there is a legitimate blemish on your credit report, but you have a valid reason, then you may also submit a statement to the credit bureau. This way, you can avoid thinking it is a fraudulent transaction by saying that you could not pay your car payment one month due to being in the hospital.

Finally, do not believe that any company can fix your credit by getting your a new Taxpayer ID or SSN. This is simply not possible, and will cause you many problems with the federal authorities. Simply do not do this, and avoid any of the other steps to ensure that you will not be a victim of credit repair fraud.

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About Moe Bedard

My name is Maurice Bedard, but most people call me Moe. I am the founder of America's #1 Mortgage Forum, LoanSafe.org, and also a website design firm called We Create Web Designs. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications. I currently live in Carlsbad, California with my beautiful wife and children.

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