Tiana Clewis: Hey Dreamers and welcome back to my channel where we break down all things money so that you can use that money as a tool to create a life that you truly love and enjoy.
In this video, we're talking about common credit repair scams and yes, I know, we've been talking about credit a lot lately, which is super unusual, but it keeps coming up in conversation so we've got to talk about it here. And so what we're going to do is we got to talk about these credit repair scams because if you use the wrong credit repair company to fix your credit. You can end up broke with a worse credit score or even in jail.
The reality is that for anyone that's not yet a millionaire - or maybe working in real estate - your credit score matters... A lot. And if you've had a history of late debt payments, maxing out credit cards, or even defaulting on loans, your credit score may have taken a total nosedive. That means you're paying more in interest, than you have to for access to cash and that makes it so much harder to accumulate wealth. So now millions of people are looking for someone to point them in the direction of a quick fix for their credit score.
This is why credit repair scams are now running rampant. I see people in social media all the time making claims that they can help you increase your credit score all the way to maybe even a perfect credit score of over 800. Now, don't get me wrong, some credit repair companies are legit, but there are many opportunists out there that are taking advantage of desperate people that don't know how credit works or don't understand what the rights are.
Well, that's where I come in. So let's start unearthing, some of these common scams so that you can keep your money and your future safe.
Now wait a second, before we dive into the scammy foolishness of some of these so-called credit repair agencies, let me introduce myself to the newbies of the channel.
I'm Tiana B Clewis, a Financial Lifestyle Coach who has made it her business to help women entrepreneurs use money as a tool to help them escape that nine to five grind - you know, that grind that sucks the soul out of you - so that you can now use money as a tool to build a life worth living. It's something that I've been living out each and every day.
So if you want to join me on this mission, go ahead and like this video and subscribe to my channel below. Then hit the bell to make sure that you're notified every time I drop new videos every Wednesday and Saturday. Okay, so now let's get back to the subject at hand: these credit repair scams.
The first scam I want you to be on the lookout for, and the one that's probably the most common is the scam, where they tell you that they're just going to dispute absolutely everything.
Many of these companies are going to tell you that there is a way to dispute each and every item on your credit report, and that's just not true. What they're referencing many times when they talk about this is the Fair Credit Reporting Act, which does say that you can dispute things on your credit report. However, there are stipulations on the type of things you can dispute.
You can dispute something that's completely false. You can dispute something that's inaccurate or that's a complete. You can also dispute anything that cannot be verified, and that's the loophole that many of these companies try to use to tell you, "Hey, if we just dispute everything, then maybe there's something that they won't be able to show is verified. They won't be able to show tho signature on the contract to show that this is a legitimate debt and then we can get it taken off of your credit score or your credit report."
The reality is that disputing everything on your credit report, even the things you know for a fact should be there, is unethical and it's a fraudulent act and I'm never going to tell you to do something that constitutes fraud. Yeah. Many of these companies will convince you that it's a okay, it's no big deal because they should have kept the paperwork - and yes, it's true. They should have kept the paperwork.
But you signed up for the debt, you agreed to the debt. You said you were going to do these things and yeah, you did miss the payment. You did default on the loan. You did stop paying them. It's just the reality of the situation. So I know it can be very tempting to say, "Nope, take it off, because I don't want it there."
But if it's real, if it's legitimate, if it's accurate - then, well, you should be taking responsibility for that debt. And the moment it gets taken off, just because they didn't keep the paperwork is the moment that you are now lying on your credit report and to everyone that has to make a decision based on it.
Another scam is when they tell you to stop paying your debts because they want you to pay them and they will pay the debts for you. Now, this one can be a little obvious. The truth is there's many companies that when they tell you this, they don't pay the debts. They just take your money and they run. They disappear.
All of a sudden, they're not answering the number that you've been calling. The emails start bouncing back. You can't get anyone on the phone. All you can ever get is a voicemail box that's probably full because they haven't been checking it. This scam has gotten a lot of people and has jacked many, many people for lots and lots of money.
Instead of you giving them complete control over your debts and how your debts are paid, they need to be working with you as a partner. They should be helping you stay on time with your debt payments. They should be helping you figure out how much money you should be giving to this company. Should I be making a phone call to that company to create some sort of settlement? They should be helping you with those things.
They shouldn't just say, give me all the money and we'll make the payments for you. That's a very dangerous game. They need to be your partner. They need to be educating you. And in fact, if they're not being your partner, if they're not educating you, they're actually setting you up for failure because what's going to happen is that you've gotten used to them taking care of your debt so that your credit score goes up. And then when your credit score is where you want it to be, you have not changed your behavior and because your behavior has not changed, you're probably gonna end up right back in the same position that you were when you got that credit repair company. You might even be in a worse financial position because your behavior has not changed and you go wylin.
I've seen it many, many times. People do it when it comes to debt. With credit cards, for example, you hear about debt consolidation loans where you take all of the money off of your credit cards. You put it on this loan, but then you don't close the credit cards and then you're like paying off that debt consolidation loan, but then you start racking up the debts on the credit card.
Same concept applies here. You're in a worse financial situation because you never changed your behavior.
So one, you run the risk of them running away with your money and not actually paying the debts, which can give you a worse credit score. But then you also run the risk that even if they are legit, they're not educating you, they're not teaching you how to do this on your own, and you're ultimately going to end up probably back in the same position or in a worse position later on because your behavior never changed and you did the same foolishness that got you in trouble in the first place.
So if they tell you to stop paying all your debts and to pay them instead, cause they'll pay it for you, know that that's a scam. And even if it's not actually a scam, even if they are actually going to pay the debts for you, it's going to be something that's going to be detrimental for you in the end because your behavior has not made the necessary changes to protect yourself from needing them again in the future.
Now, the next scam, and I have to admit this one can be really, really tempting. What they'll do is they'll tell you that they are going to get you a brand new social security number, a brand new identity, and you can just start over with brand new and fresh credit.
Tell me that's not tempting to you. Who doesn't want to start over? You look at the message you've made with your finances, the mess you've made with your credit, and you wish you could just wipe the entire slate clean and just be free. In fact, if you've ever looked at your credit and said, "I want a do over", let me know in the comments by typing just that. "I want a do over."
The idea of giving you a new social security number and a new identity is all about just having that clean slate. You have no credit history. There is nothing good. There's nothing bad. You can just start over with brand new habits that are good habits. We have our positive habits to build your credit score the way that you want it to look.
And on top of that, when the other companies are trying to track you down, trace you down, they can't find you because you're a totally different person. Right?
The problem is that is 100% illegal and it can land you in jail. It is a form of fraud and even worse, their offered to do that for you is in complete violation of the Credit Repair Organization Act, which is an act that governs how credit repair companies and credit repair agencies are able to help you.
How they can represent you. What strategies they can and cannot use. And this is one of the ones that they cannot use. They cannot offer to give you a brand new identity because it's fraud. Plain and simple.
So if they're telling you that they're going to get you a new identity, you're going to get a new social security number that they're just going to wipe the slate clean and you're going to start over: this is a scam and it is an illegal act that can land you in jail. Girl, don't do it. Okay. Just don't do it. Do not even give this a try because if the government decides to come after you, if one of those companies that you owe money to can find you and they report you, you can end up in jail and I do not want that for you.
Now, another scam is when you come across a credit repair company that demands some sort of large payment upfront. And this one is a little interesting because it seems like it makes sense.
From a business standpoint, if I'm going to help you do something that will ultimately save you thousands of dollars over your lifetime - maybe even millions of dollars, depending on what you're able to do - it makes sense that I would want to charge you a large fee upfront. Right?
The problem is too many of these companies were going out there charging large upfront fees and running away with the money. So what they did with this Credit Repair Organizations Act - the one that I mentioned a few, um, the one that I mentioned a few moments ago - they decided, "Nope, no more of that. You cannot charge a large upfront fee. We don't want you to take all these people's money and then just run away before you've even rendered any services. No. We want to make sure that these people are getting the services that you're promising because people need their credit."
When you actually read the Credit Repair Organization Act, it talks about the reason why it's so important for people to be able to fix their credit, to be protected against companies trying to do this. It specifically says that in the law.
And in fact, if you want to go read the law, go ahead and pop into the description below. I have the link down there for you. It's really short. Don't worry, it's not going to take you a long time to read, but if you look at that top part, it specifically says why this is so important to protect consumers from these credit repair agencies that would take advantage of them.
And this is one of the ways that agencies were taking advantage of people and so this act was used to put a stop to it. So if they are demanding an upfront fee of any kind - it doesn't even have to be a big one. It can be a small one - but if they're demanding an upfront fee to render services to you to help you repair your credit... Guess what... They are in violation of the law. You can report them and you know for sure that they're not functioning the way they are supposed to, which now means, it's a scam.
The fifth and final scam that I want to cover is when they tell you to stop paying on debts that they have successfully removed from your credit report.
Now this one, it seems like "Hey, they got to take it off. I don't have to pay it anymore." Well, not really. That's actually not quite how it works. Remember, according to the Fair Credit Reporting Act, you can have something removed from your credit report, that's inaccurate, that's incomplete, that's false. But clue in on the inaccurate, incomplete, or maybe they didn't keep the paperwork and they didn't verify it in the appropriate timeline.
The thing is, just because it was removed from your credit report, doesn't mean you don't still owe the money. So what these companies are able to do is they're actually able to go to the courts and to sue you and say, "Hey, she owes me this money. He owes me this amount of money for a contract that we had for a loan that I gave them for a line of credit that I extended them and they never paid."
So the judge says, "Hey, you never paid. You owe them this money. I'm going to garnish your wages. I'm going to take your taxes. I'm going to do whatever." They are going to render a judgment against you and now you're still stuck paying this money to these people who you stopped paying because you thought that because it's no longer on your credit, you're good to go.
The - a lot of these companies will not tell you that fact. So if you just stop paying on any debt that they've successfully removed, you can easily find yourself in a situation where you end up with a, um, where you end up with a court judgment against you.
But also there's the reality that they can put it back on your credit. Yeah. I said that they can actually put it back on your credit. Just because they took it off doesn't mean that they can't put it back on there. All they has to do is start reporting on it again.
And so if they start reporting on it again and you haven't paid that debt and three, four, five months, now you find yourself in a situation where you have even more missed payments. You have even more late payments and it makes your credit score go down even more.
What they need to be doing is they need to be telling you, what do you do with these debts that are successfully removed? How are we going to handle it? What is our strategy? They need to be talking to you about that.
But if they just flat out say, well, don't pay them anymore, you're good to go. And they don't mention the fact that it can appear back on your credit report. They don't mention the fact that these companies can take you to court. Well, huh? It's scam because they don't want you to know that information. They just want you to pay them and then they can artificially boost your credit score for a little while and you're happy. You've given them money. You walk away, and then you get messed over down the road because these things hit that they never educated you on.
They should be helping you with these strategies, and if they're not giving you this information, they're not telling you what to do about these things, it's a scam. Or at least at a minimum, they don't know what the heck they're doing. I'm just saying.
And boom, there you have it: five common credit repair scams that you definitely want to dodge. Now, if you are thinking of using a credit repair company to boost your credit score, make sure that you save this video so that you can refer back to it later. Or if you know someone who's talking about doing that, be sure to share this video with them because this is information that they need to know in their shopping process for credit repair companies.
Also, I have to let you know that this Saturday I'm dropping another video that's going to cover nine red flags that you should be looking for so that you can protect yourself and others from these credit repair scams.
Now, if you happened to come across this video, because you were already Googling credit repair companies, you were researching them. You're planning on hiring one. ASAP. You can skip ahead and get that list now by downloading episode 95 of the dreamers Financial Playbook podcast or wherever you like to listen to podcasts. Simply fast forward to roughly halfway through the episode, and there you go, you can get the nine red flag that you should be looking for.
You can find links to the Dreamers Financial Playbook podcast on iTunes, Google Play, iHeartRadio, and more in the description below.
Now before you run off to the Dreamers Financial Playbook, let me know that you found this video helpful by hitting the thumbs up below and subscribing to my channel. Don't forget to hit the bell so that you're notified when I drop the nine red flags to look for this Saturday.
Finally, if you're looking to learn more about your credit score, how it's calculated, and how you can get it to go up, here are two more videos that you definitely want to check out.
Now, with that, I'll see you on Saturday. Bye bye.
The Federal Trade Commission had created a summary of your rights under the Fair Credit Reporting Act (FCRA):
Read the Credit Repair Organizations Acts and the Consumer Credit File Rights Under State and Federal Law statement for yourself:
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