How to Spot a Seedy Credit Repair Company
On the way to lunch the other day, I saw a bright pink sign decorated with ribbons attached to a post alongside the road. As it’s Breast Cancer Awareness Month, such signs aren’t exactly a strange sight. But the words written on the sign were downright odd.
“BREAST CANCER AWARENESS CREDIT REPAIR,” the sign boldly declared. “WE ARE THE BEST!”
I pondered the sign over lunch. Was this company offering special services to cancer survivors? Donating proceeds to cancer research? Simply shamelessly capitalizing on a popular charitable cause? Or, just hoping that people would do a shocked double-take like I did and visit their website?
The website itself is vague and did little to explain the peculiar sign. Yet something just didn’t sit right. And that left me wondering about how to sort out the bad apples of credit repair from the credit counseling services we often recommend.
Here are some signs that a company is out to victimize those with poor credit:
- It wants you to pay in advance. Debt repair companies are prohibited by law from asking you for money until they’ve provided the services promised, according to the Federal Trade Commission (FTC).
- It tries to stop you from helping yourself: If a debt repair company doesn’t explain to you what you can do yourself for free — or if it discourages you from contacting the credit bureaus on your own — consider that a red flag.
- It promises a clean slate: If you have valid black marks like bankruptcies or delinquent payments on your credit reports, nothing (except for the passage of time) will make them go away. Any company that promises to remove legitimate black marks on your credit report is up to no good. The same goes for companies that promise they can help you create a “new credit identity.”
If you suspect a debt repair company is behaving illegally, contact your state attorney general. And if you suspect the company is simply charging you for work you could do yourself, remember that you can often DIY it when it comes to correcting simple credit report errors (learn how here).
With protecting your financial interests in mind, here are some of the best personal finance blog posts of the week:
Budgeting in the Fun Stuff describes how a new house can eat away at your budget.
Daisy from When Life Gives You Lemons lists her goals for the next few years — and how much they’ll cost.
Not Made of Money provides five tips for stretching your holiday budget.
Stupid Cents explains how to protect yourself when signing a contract.
Clever Dude breaks down some of the creative methods he used to pay down more than $20,000 in debt.
Eyes on the Dollar explores some of the financial complexities of becoming self-employed.