Credit repair companies are useful when it comes to disputing negative entries and improving credit reports. Unfortunately, there are some people or companies who are out to take advantage of you in the name of repairing your credit. These companies can con you if you don't know how to differentiate between them and their genuine counterparts. Here are some common forms of these scams:

Incomplete Contract

Although there may be variations in the wording of contracts from different agencies, there are some specific things that your contract should have. For example, you should know the exact services you are being offered, the address of the agency, and the amount you are paying for the services. If you don't get a contract to sign, or you get one without one or more of these crucial details, then you are probably being scammed.

Request for Upfront Payment

Scammers across all industries are more interested in the money they are getting from you than the services you intend to get from them, and credit repair scammers are no different. This is why they are likely to ask you for a large upfront payment. Even if you realize that they are not delivering on their promises, they will have profited from your ignorance. In fact, this is why the federal Credit Repair Organizations Act does not approve of upfront payments for credit repair.

Promise of a New Identity

Any credit repair organization that promises you a new identity is probably scamming you. Some agencies do this to set you up as a business entity (instead of an individual) so that you can get a clean record and build up your credit afresh. Some also promise new Social Security numbers.

Unfortunately, getting a new identity complete with a fresh Social Security number or federal Employer Identification Number (EIN) is against the law. There are only a few cases where you are allowed to apply for a new Social Security number, and credit repair is not one of them. Any agency that promises to repair your credit via an illegal service is scamming you.

Cancel your credit repair contract as soon as you suspect that you are being scammed. You may also contact an attorney to evaluate your case and help you determine whether your suspicions are genuine. A credit repair scam is a criminal offense just like any other con game, which means the company conning you will be facing criminal charges if your suspicions are confirmed.  

Contact a legal professional like Fadely Lewis PLLC for more information.