As millions of Americans know, poor credit can be a huge hindrance on their life, holding them back from financial success and making it more difficult to get loans. Bad credit also means huge interest rates that can suck thousands of dollars out of your bank account. As such, many Americans turn to credit repair organizations to help them rebuild their financial lives. Many of these organizations are perfectly legitimate, for-profit companies that want to help you be financially successful. Unfortunately, many are scams. Here is how to identify and avoid those companies.
First, as noted by the Consumer Financial Protection Bureau, there are strong laws that dictate what a credit repair company can and cannot do. For example, credit repair companies cannot:
- Demand an upfront payment for their services. As set by law, they can only get paid for positive results.
- Make extravagant promises. Credit repair companies can help you remove erroneous strikes against your credit and can potentially work with debt collectors to give you more time or come to a resolution. They cannot remove long-term negative history, and if they make concrete promises about what they may be able to do, avoid them at all costs.
- Tell you not to contact a credit company. You can – and in many cases, should – contact a credit rating organization and try to resolve the issue on your own, before paying for someone else’s services.
- Fail to answer questions. If a company seems like they are hiding information, avoid them.
It may also be worth checking out a company’s reviews in a service like Google or Yelp. These reviews will often be studded with consumer expires – positive or negative. You should always keep in mind that negative reviews aren’t the end of the world – many individuals will have negative experiences with a company for one reason or another, and that may not be the company’s fault. However, if there is a series of negative reviews, and they repeatedly hit the same points, it may be worth avoiding the company.
Furthermore, you can search specifically to see if they are a scam. Go to Google, type in the company’s name, and add the word “scam” or “ripoff.” Odds are good that people have complained about a company if they have ripped them off in the past. Obviously, this won’t give you a complete perspective, and one or two people may have had negative experiences with an organization, causing them to call it a scam, but that doesn’t mean it’s the case.
You can also check out a company in the Better Business Bureau. This is a non-profit organization that is dedicated toward helping consumers identify good and bad companies. They also take complaints against companies with a history of ripping off their customers. If you see a company in their database as a problematic organization, you may want to avoid them.
Last, find a credit repair company from a trusted source – and only a trusted source. Google can be nice, but you may not have a formal, credible way of evaluating a company’s success rate. Instead, ask your bank or financial planner for recommendations for a good credit repair company. Keep in mind that they may recommend a company that is part of their financial network, or someone for whom they get a commission if they make a good recommendation. As such, their recommendation may be biased.
Remember, when it comes to finding a good credit repair company, you are making a very important decision about your financial future. Treat it seriously. Do your homework and engage in extensive research to make sure you are finding the best company for you. The company you settle on may be the difference between you and a better credit score.