Overview
Credit repair scams target consumers by falsely promising they can dispute and remove negative information from credit reports, even if the information is accurate. While it can be tempting for consumers to offload the work of fixing their credit reports to a credit repair company, it’s important to know what they can and can’t do—and to take steps on your own before subjecting yourself to their fees and potentially fraudulent promises.
Resources
Warning signs of scams:
- Charges an up-front fee
- Assures a specific outcome or result
- Encourages you to lie and dispute accurate information
- Asks you to ignore credit reporting agencies
- Fails to explain your rights
How do I improve my credit?
There is no one-size-fits-all solution when it comes to credit scores, credit reports and credit behavior, but here are some tips for building healthy credit behavior.
- Check your credit report regularly
- Make Payments on Time
- Know How Much Available Credit You’re Using
- Consider How Many Credit Accounts You Have
- Be Wary of New Credit
Learn more here.
Understand Credit Repair
The three nationwide credit reporting agencies (Equifax, Experian, and TransUnion) offer services and tools to help consumers dispute legitimate inaccuracies in their credit report for free.
Consumers can access their credit reports from each of the three nationwide credit bureaus for free by visiting www.annualcreditreport.com. This service along with other information about filing disputes can be found on each agency’s website:
Is there existing legislation to address credit repair?
- The credit reporting industry is committed to continuing to work with the Federal Trade Commission and Consumer Financial Protection Bureau to protect consumers against any harmful or abusive tactics.
- The Credit Repair Organizations Act (CROA) is a federal law in response to a number of consumers who had suffered from credit repair scams. In effect, the law ensures that credit repair service companies:
- Are prohibited from taking any payment from a consumer until they fully complete the services they promise.
- Are required to provide consumers with a written contract stating all the services to be provided as well as the terms and conditions of payment. Under the law, consumers have three days to withdraw from the contract.
- Are forbidden to ask or suggest that you mislead credit reporting companies about your credit accounts or alter your identity to change your credit history.
- Cannot knowingly make deceptive or false claims concerning the services they are capable of offering.
- Cannot ask you to sign anything that states that you are forfeiting your rights under the CROA. Any waiver that you sign cannot be enforced.
- The CROA adds transparency and due diligence to the credit repair process, making it less likely that consumers will be taken advantage of. However, regulators have still found wrongdoing among some credit repair companies. For example:
- FTC Shuts Down Credit Repair Pyramid Scheme Financial Education Services, Which Bilked More Than $213 Million from Consumers (5/31/2022)
- FTC Acts to Shut Down ‘The Credit Game’ for Running a Bogus Credit Repair Scheme that Fleeced Consumers (5/6/2022)
- FTC Halts Deceptive Credit Repair Operation that Filed Fake Identity Theft Complaints (3/21/2022)
- CFPB Sues Software Company That Helps Credit-Repair Businesses Charge Illegal Fees (9/20/2021)
Media Resources
- Equifax, Experian and TransUnion Extend Free Weekly Credit Reports in the U.S. Through 2023 (September, 23, 2022)
- Consumer Data industry Association: Credit Reporting: Our Obligation to Consumers (January 10, 2022)
- Forbes: How To Fix Covid-19 Related Credit Report Errors (April 5, 2021)