How to Avoid Credit Repair Service Scams

Credit repair scams to avoid

Repairing your credit history after a setback can feel overwhelming. Unfortunately, some credit repair companies take advantage of this by using confusing and misleading tactics to target consumers who are trying to get their financial lives back on track.

Over the past several months, many people have submitted complaints to the CFPB (Consumer Financial Protection Bureau) about credit repair scams. More than half of these complaints described the issue as “fraud or scam.” Clearly, there is a need for consumers to be aware of these scams and know how to protect themselves.

Red Flags to Look Out For

If you come across advertisements or receive offers to fix your credit, it’s important to be cautious and watch out for these red flags:

  • Demanding payment upfront: A reputable credit repair company will not request or receive payment until they have completed the services they promised. Under the Credit Repair Organizations Act, credit repair companies are forbidden from using deceptive practices and accepting upfront fees. Remember, “Don’t pay upfront” is a simple rule to follow.

  • Promising quick fixes: Be wary of companies that claim they can remove negative credit information from your credit report in a short period, even if the information is accurate and current. Additionally, no one can guarantee a specific increase in your credit score or guarantee any specific result. Repairing your credit takes time.

  • Inability to answer questions: If a company representative cannot explain the specifics of the services they offer or the total cost for those services, it’s a sign that something may be amiss. Reputable organizations should be able to provide clear answers to your questions.

  • Withholding or providing misinformation: A trustworthy credit repair company will inform you of your rights, which include the right to obtain a written contract detailing the services and the ability to cancel the contract within three business days. They should also disclose the full cost of their services. If a company suggests that you should not contact any of the nationwide credit reporting companies directly, it’s a major red flag. You have every right to contact them.

  • Misrepresenting information: If a company suggests that you should try to create a “new” credit identity by applying for an Employer Identification Number instead of your Social Security number, they are veering into unethical territory. It is important to work within the legal framework when repairing your credit.

Know Your Rights

To protect yourself from credit repair scams, it’s crucial to understand your rights and take appropriate action:

  • Avoid paying upfront: According to the Telemarketing Sales Rule, it is illegal for a telemarketing or sales company to charge you for credit repair services unless it has been six months since they achieved the promised results and they have proven to you that those results have been achieved.

  • Dispute errors yourself: Under the Fair Credit Reporting Act, you have the legal right to dispute credit history errors on your own for free. You do not need to pay a credit repair company to do this for you. Start by obtaining your free annual credit report from one or more of the three nationwide credit-reporting companies. Review the report for any errors and follow the guidelines provided to correct them. Each credit reporting company’s website also allows you to dispute errors online.

If you suspect that you have been a victim of a credit repair scam or have had issues with a credit repair company, you can submit a complaint to the CFPB for further investigation. For more information about credit reports and scores, you can visit the Ask CFPB online database, which provides answers to frequently asked financial questions.

Remember, knowledge is power when it comes to protecting yourself from credit repair service scams.


Q: How do I know if a credit repair company is reputable?

A: A reputable credit repair company will never demand payment upfront, will accurately set expectations about the time it takes to repair credit, will be transparent about their services and costs, and will provide you with information about your rights and the ability to cancel the contract within three business days.

Q: Can a credit repair company guarantee specific results?

A: No, no credit repair company can guarantee specific results. Repairing your credit takes time and depends on various factors.

Q: Is it necessary to pay a credit repair company to dispute credit history errors?

A: No, you have the legal right to dispute credit history errors yourself for free. The Fair Credit Reporting Act allows you to correct inaccuracies without the need for a credit repair company.


Navigating the world of credit repair can be challenging, especially when there are scams to watch out for. By being aware of the red flags and understanding your rights, you can protect yourself from falling victim to credit repair service scams. Remember to approach credit repair with caution, always do your research, and take charge of your own financial well-being.

[Updated July 30, 2019. An earlier version of this material contained additional information applicable only to debt relief services.]