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Credit Repair Scams

There are many scams out there, all of them designed to take advantage of people in desperate situations. Indeed, if you are in over your head with regard to your financial situation, you might be willing to try almost anything to solve the problem. However, it is important that you slow down and carefully evaluate your options. It is just at this time that you are most vulnerable to scams.

When it comes to your financial situation, there are two main categories of scams: those that deal with debt management and those that deal with credit repair.

  • Debt management scams focus on your desire to get out of debt. These are schemes that promise to help you consolidate or settle your debt. Some of them charge impossibly high fees. Others simply take your money and disappear. In either case, debt management scams can do more harm than good.
  • Credit repair scams are a little different. If you have poor credit, you may want to improve your score so that you can get approval for a home loan or a car loan. You may want better interest rates and terms. These scams promise to fix your credit quickly. However, they may use dubious practices and charge high fees.

Both of these types of scams involve promises to make everything better and help you overcome your troubles. Some of them may even promise rapid solutions. It is important to remember that there are no "quick fix" solutions when it comes to debt and credit problems.

Steps to take when dealing with debt management and credit repair companies

Before you commit to a debt management company or a credit repair service, you need to do your homework. You want to do your best to verify the practices, and see that you are not paying too high of fees, or that you are being scammed. Here are some steps you can take to help verify the service you are considering:

  1. Check that state Attorney General's office or Web site for information on the company. You can also check the company's background, and view complaints and issues, with the Better Business Bureau.
  2. Get free information about the company. Realize that most reputable businesses will send this information without you having to disclose any of your personal information or your financial details.
  3. Get everything in writing. From terms to payment policies to what is guaranteed as part of the service, you need to get the information in writing. You should have copies that you can refer to. Never take a verbal "guaranty" to mean anything solid.
  4. Comparison shop. Take the information you receive, and the written terms and agreements from different companies and compare them. Compare fees, terms, plans and practices and policies. You want to choose the company that offers the best deal, not the first program that will help you out.
  5. Be wary of offers that promise very fast results, or seem too good to be true. No solution is going to be fast. Most debt management programs last between three and five years. When done correctly, it can take as many as 30 to 60 days to see a true improvement on your credit file and score.

Doing it yourself

While there are services that offer debt management and credit repair, it is important to realize that you can a lot of it yourself. You can set up your own debt management plan, as well as take steps to repair your own credit.

You can create a debt management plan to help you eliminate your own debt. It does take discipline though. You do this by looking at your budget and determining what extra money you have each month that can go toward reducing your debt. You may have to adjust your budget and cut unnecessary spending. Then, you can use the "debt snowball" technique to pay down one debt at a time with the extra money, while still paying the minimum on your other loans.

It is also possible to repair your credit on your own. There are some things you can do that can impact your credit score after a couple of months. Paying your bills on time and in full, paying down some of your debt and avoiding new debt can help you get on the path to credit repair.

If you plan carefully and consider your options, you can avoid debt management and credit repair scams, and maybe even do it yourself saving you a great deal of money in fees and service charges.

Related Article: Best Credit Repair Services >>

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