Money traps
The 'Credit Repair' Company Promising a Clean Slate Is Probably Breaking the Law
The FTC warns that companies promising to erase accurate negative information or give you a 'new credit identity' are misleading — and illegal.
When your credit score is holding you back from a car, an apartment or a mortgage, an ad promising to fix it fast is tempting. The Federal Trade Commission warns that many of these offers are scams.
Fake credit repair companies often promise to remove accurate negative information from your report, or to create a new credit identity. Both claims are misleading and illegal.
Asking for payment before providing any services violates federal law.
The 'new identity' trap
Some companies sell what they call a fresh start: a different number to use instead of your Social Security number on credit applications. Using it can get you in serious legal trouble — the risk falls on you, not on them.
Others tell you to dispute every negative item on your report, including accurate ones. Accurate information can't legally be removed just because you dispute it, and you'll have paid for nothing.
What you can do yourself, for free
You can get free copies of your credit reports from Equifax, Experian and TransUnion through AnnualCreditReport.com, the official site. If something is wrong, you can dispute it directly with the credit bureau at no cost. Time and on-time payments are what genuinely rebuild a score.
Red flags
- A company guarantees a quick fix or a specific score increase.
- It wants money before doing any work.
- It tells you to dispute accurate information or to use a new identification number.
- Report it at ReportFraud.ftc.gov.