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How to Avoid Credit Repair Scams

Publish May 24, 2019

By Jordan Ottaway 

Suffering from bad credit can sometimes leave you feeling like you have nowhere else to turn. So, when you see a company saying they can help repair your credit, you want to jump on it, right? 

Not so fast.

It’s really unfortunate the credit repair business is home to many companies that only want to scam its customers instead of helping them better their lives. Don’t be sucked in by a promise for a “new credit identity” and make sure to check if the company has good intentions.

Promising you a “new credit identity” 

We just mentioned this, so it makes sense to start with it. When you see a company offering to fix your credit overnight, know that it’s not legit and stay far, far away.

According to the Federal Trade Commission, how this scam works is by paying a fee and the company will provide you with a nine-digit number closely resembling a Social Security Number (SSN). This is called a credit profile number (CPN) or credit privacy number. 

Or, the company might even have you to apply for an Employee Identification Number (EIN) from the IRS. This is NOT a substitute for your SSN because EINs are used by businesses to report financials to the IRS and Social Security Administration. 

If you take any of these numbers and try to open any lines of credit, it won’t work and you will probably find yourself in legal trouble. Keep in mind that it’s a federal crime to:

  • Lie on a credit report or loan application
  • Misrepresent your Social Security number
  • Obtain an EIN under false pretenses 

Never use a SSN that is not yours and know that there are NO alternatives for it. 

Ok, so that was the big one, but there still are some things you need to look out for.

Other signs of credit repair scams 

Scammers know that people with bad credit want to get it fixed quickly and will use that to their advantage to make it sound like a great opportunity. So, be aware of other red flags that can let you know if you’re working with a bogus company. 

  • Asking for payment up front—It’s against federal law for any credit repair company to charge you a fee before they’ve completed the work they promised you. There are no deposits, initial payments, or anything else.
  • Not able to cancel services—If the company won’t allow you to cancel your agreement, get out. Federal law requires all companies to give you three days to cancel after signing your agreement. There are some legitimate companies that will give you even longer than that.
  • Won’t tell you your legal rights—Credit repair services are required by law to give you a written statement of your legal rights before any agreements are signed. If any company rushes or skips this, get up and leave immediately.
  • Overnight results—When it comes to credit repair, nothing happens overnight. Credit bureaus normally take 30-45 days to investigate any disputes, so anything happening before that is highly unlikely.


While there are other ways for you to give your credit a boost on your own, there is nothing wrong with consulting a professional to make sure you know what options you have. 

Your credit is important to you and your overall financial health, so be aware of who you’re working with and any red flags and you should be good to go. If you do suspect you’re working with a bogus company, don’t hesitate to report it.

Headshot of Jordan Ottaway
Jordan Ottaway contributed to the Neighborhood Credit Union blog from 2016 - 2019.