Get Gephardt: How to avoid credit repair or debt relief scams
Oct 24, 2023, 10:48 PM | Updated: Oct 25, 2023, 8:35 am
SALT LAKE CITY — Getting debt under control can feel overwhelming, so many of us turn to professionals for credit repair help. But hiring the wrong firm for that help can sink your credit even further.
Over at the Better Business Bureau, they hear repeatedly from folks who have hired a debt relief or credit repair firm that has left them in worse shape.
“They told her to stop making payments, stop taking calls from creditors,” said the BBB’s Tim Johnston of an Ogden woman’s recent experience. “She saw her credit score dip about 200 points.”
Johnston said they’ve received more than 11,000 complaints about credit repair firms – many of them based in the West. Their new report shows many companies use confusion and urgency about unpaid debts to rip people off.
Credit repair takes some time
The first thing you should watch out for, warns Johnston, is promises of quick fixes. Credit repair can take months, even years.
“When you find yourself in the situation where you’ve got some crushing debt, or maybe a poor credit score, these are not things that can be turned around in a short period of time,” he said.
And don’t pay one dime until they’ve actually started work.
“The FTC (Federal Trade Commission) put in a rule that prohibits charging upfront fees when it comes to say debt relief,” Johnston explained.
Watch out for any firm asking for access to your bank information immediately.
“They might say that they have special access to loan forgiveness programs or special access to government agencies,” he said. “Or they might say that you need to pay some taxes up front before something can be settled, like your debt, or consolidated.”
And by law, they must give you a written contract explaining how they’ll achieve what they promise.
“It comes down to communication and letting you know what exactly is taking place.”
Johnston said to research a firm’s reputation before you hire them, even the big ones. Truth be told, you can usually do anything that a credit repair company can for little or no cost, with the biggest sacrifice being your time.