The Dos And Don’ts Of Credit Repair

If you’ve recently been rejected from a credit application of any kind, you may be poor creditlooking at a poor credit score for any number of reasons. You might have been late with your credit card payments, have an outstanding judgment against you or have even been frauded or victimized by identity theft.

Whatever the cause of the fall in your score, you’re probably looking for ways to get it back on track. Tread carefully! There are lots of dishonest opportunists looking to make a quick buck off your pressing need. Don’t become the next victim of a credit repair scam. In fact, there’s nothing a credit repair company can do for you that you can’t do yourself.

This probably has you wondering how to untangle the legitimate steps you should be taking now from the pointless and costly actions. Look no further! Our handy guide of credit repair dos and don’ts will help get you on the road to improving your credit score.

Do: Determine your actual credit score

If a recent credit application of yours has been denied, don’t take it at face value – find out why it happened. The three major credit reporting agencies – Equifax, Experian, and TransUnion – are each required to provide you with a complimentary copy of your credit report once a year, upon request. To order yours, visit, or call 1-877-322-8228.

If you’ve already requested a report from each of the agencies in the last 12 months, you can still get one free of charge; you are entitled to a free report whenever a company takes adverse action against you, such as denying your application for credit, insurance or employment. To qualify, just request a report within 60 days of receiving notice of the action.

Do: Review your report and dispute any errors

Once you receive your report, review it for inaccuracies. If you spot any fraudulent purchases or erroneous information, you’ll need to dispute them in writing. In your letter, identify every item you are disputing and the reasoning behind your claim. Include copies of documents that support your stance and ask that the errors be removed or corrected. It’s best to send your letter by certified mail so you can ensure the credit reporting company actually received it if that is necessary. Also, keep a personal copy of your letter and all supporting documents for your own records.

You’ll also need to dispute the charge with your actual creditor, taking the same steps you did above.

Don’t: Expect any quick fixes

Anxious as you may be to improve your score, know that there is no “quick fix” for creditworthiness. Enhancing your score takes time, lots of hard work and creating and sticking to a realistic debt repayment plan.

If your credit score is poor, you may be bombarded with promotional material from credit repair companies that promise to increase your score by 100 points in less than a month. If you think these claims sound too good to be true, you’re absolutely right. There are some legitimate credit repair companies out there, but as mentioned, there’s nothing they can do for you that you can’t do on your own – and without paying their hefty fee.

Do: Take steps toward fixing your credit

If you’ve determined that your credit report is accurate, you’ll want to take a careful look at the habits that may be leading to your unfavorable score.

Are you timely with your credit card payments? If you’re consistently late, consider setting up an automatic bill-pay system so you never forget to make a payment. Are you making headway on your debt? If you’re paying your bills on time but your debt is not going anywhere, it’s time to rethink your spending habits. Don’t shop with credit cards; use only debit or cash. Look for ways to trim your expenses, like couponing wherever possible, planning dinner menus around sale items, and finding cost-free ways to relax instead of blowing money at a restaurant or on retail therapy.

Are your monthly bills unmanageable? If you can’t make it through the month and still meet all of your minimum payments, your debt may need an overhaul. Consider debt consolidation, in which your debt is transferred to one low-interest account, or a balance transfer to a card that has an interest-free period. Be aware, though, that lots of open credit is not considered favorable by creditors; close as many accounts as you open – but leave your oldest one open as it shows a longer period of credibility.

Also, no card is interest-free forever. When the introductory period ends, you may be hit with higher than usual interest rates. Alternatively, you can contact your creditors and work out a more reasonable payment plan.

If these options don’t sound feasible, try finding ways to increase your income instead, using all extra cash exclusively for paying down your debt.

Don’t: Expect to see any changes immediately

Don’t fret if you’ve made strides toward fixing your credit and haven’t yet seen an increase in your score. Creditors will only report to the credit reporting agencies on a periodic basis, usually once a month. It may take upward of 30 days or more for your account to be updated and your score to improve.

Do: Ask us for help

Here at Destinations Credit Union, we’re all about helping you manage your finances. If you’re in financial trouble of any kind, we can help! Look into our credit counseling services and assistance with creating and sticking to a budget. [We even offer debt consolidation loans, providing you with the opportunity to transfer your debt to one low-interest loan, making the prospect of paying down your debt a lot more manageable.]

Your Turn: Have you drastically improved your credit score? What was your secret weapon? Share your success and best tips with us in the comments!


How To Spot A Credit Repair Scam

Repairing your credit can be an uphill battle. You’re looking at months of hard work, headache billsnegotiating with creditors, reworking your budget and identifying the factors that are making your credit score lag. In short, it’s a hassle and it takes lots of time.

Those two aspects are what makes credit repair scams so successful. They know you’re looking for a quick way out, and they’re offering it to you on a silver platter. Unfortunately, when they’re done with you, not only will your credit score be just as low as when you started, but you’ll also be out hundreds or thousands of dollars, and may even be facing criminal charges.

There are legitimate credit repair companies, but without educating yourself, finding them instead of the scammers who only want your money can be tricky.

Here are the most common warning signs of a credit repair scam:

1.) Demands upfront payment

Know your rights. Under the federal Credit Repair Organizations Act, credit repair companies are forbidden to request or receive payment until they’ve completed the services they’ve promised. If a company is demanding upfront payment, it’s surely a scam.

2.) Makes big promises

To lure you into their trap, many scammers make wild promises about your credit score. They may assure you that they can remove negative information from your credit report, even if that information is accurate and current. Don’t believe them; no one can do this.

They might also promise to boost your score a huge amount in just a few weeks or less. This, too, is absolute hogwash. You will never see an improvement on your score until at least 30 days has passed since you’ve taken action.

3.) Promises to help you create a “new credit identity”

This red flag should alert you to one of the most devastating credit repair scams possible. In these scams, companies promise to create a new credit identity for you in exchange for a fee. After you cough up the money, the company will provide you with a nine-digit number that’s similar to a Social Security Number. They may refer to this number as a CPN – a credit profile number or a credit privacy number. Alternatively, they may direct you to apply for an EIN – an Employer Identification Number – from the IRS.

Once you have your new number, the company will instruct you to use this form of ID to apply for credit. They assure you that the process is legal. In reality, though, it’s not – and you’ve just been scammed.

These companies are actually selling you a stolen SSN, often one belonging to a child. They walk away with the money you paid them, while you are stuck in a far deeper hole than when you first contacted them. It is a federal crime to misrepresent your Social Security number, to obtain an EIN from the IRS under false pretenses and to lie on a credit application.

Falling for a credit identity scam could mean facing fines or prison time. If you come across a credit repair company offering you a new identity, run the other way and don’t look back (and report them to the authorities)!

4.) Tells you not to contact the credit reporting agencies

Every U.S. citizen has the right to a complimentary report from the three major credit reporting agencies every year. If a company advises you not to contact these agencies directly, they will probably charge you for obtaining the report on their own. In other words, you will be paying for a free service.

5.) Tells you to dispute accurate information on your credit report

Disputing accurate information on your credit report is dishonest and illegal.

6.) Is evasive about your legal rights and their services

The Credit Repair Organization Act made it illegal for credit repair companies to lie about your legal rights and about their services. This law is enforced by the Federal Trade Commission (FTC). To comply with this law, credit repair companies are required to explain:

  • Your legal rights and clear details in a written contract of the services they’ll perform
  • Your three-day right to cancel the contract without charge
  • The anticipated amount of time it will take until results are evident
  • The total cost you will need to pay for their services
  • Their guarantee

If you’ve already hired a credit repair company and they haven’t lived up to their promise, you still have options.

You can choose to sue the company for your losses in federal court or seek punitive damages – money to punish the company for violating the law. You can also find other victims so you can band together and file a class action lawsuit against the company.

To protect others from falling prey to the same scam, it’s best to report it to your local consumer affairs office or to your state Attorney General.

It’s also advisable to file a complaint with the Federal Trade Commission. The FTC cannot resolve individual credit disputes, but it can take action against a company for multiple law violations. You can file your complaint online at or call 1-877-FTC-HELP.

Finally, if you’re in financial trouble of any kind, we can help! Stop by today to ask about our free credit counseling services and assistance with creating and sticking to a budget. [We even offer debt consolidation loans, providing you with the opportunity to transfer your debt to one low-interest loan, making the prospect of paying down your debt a lot more manageable.]

Your Turn: Have you been targeted by a credit repair scam? How did you spot the scam? Share your experience with us in the comments!