Debt Settlement Company Red Flags
Credit repair companies often advertise their services on the radio or television, and what they promise sounds almost too good to be true: for a small fee, they will somehow magically boost your credit score.
In reality, these credit repair services are not doing much that you cannot do on your own. Even worse, they might keep many people from truly tackling their debts by filing for bankruptcy. In this article, we highlight several red flags to look for if you decide to give credit repair a try.
You Can’t Figure Out What the Company Does
According to Credit Karma, most credit repair companies boost a client’s score by getting inaccurate negative items removed from their credit score. For example, someone’s credit report might erroneously state that they have an account in collections or that they have been late with payments. Other negative information includes liens, bankruptcy, and too many credit inquiries.
However, negative items make up only a fraction of a person’s score. If you are maxed out on your credit cards, then that is bringing your score down—and, unfortunately, the credit repair company will not pay down your balance!
Furthermore, consumers can request that erroneous or outdated items be removed themselves. In effect, you are simply paying for the convenience of having someone else try to clean up your credit report. Many companies obscure these facts by not being upfront about what services they provide.
The Company Makes Specific Promises
Anything like, “We promise to boost your score by 100 points” is suspicious. The fact is that the company cannot guarantee any specific increase in your score because they can’t guarantee that negative items will be removed. If you are in default on 2 credit cards, the credit companies have no obligation to remove that negative information if it is accurate.
You Don’t Understand the Fees Involved
Any business transaction should be transparent. You should know exactly what you are getting and precisely how much you are paying for the service. Avoid any credit repair company that hides the ball on the fees it charges or that tries to tack on unnecessary fees and costs, like credit monitoring that you don’t want or need.
The Company Requests Payment Upfront
Credit repair services can only request payment after providing services or a promised result. Run from any company expecting payment before they begin working for you.
There Are Many Complaints Online
Do a basic Google search. You can also check the Better Business Bureau. Look for an abundance of negative reviews. Yes, those who are unhappy are more motivated to leave reviews than those people pleased with the services, but a large number of negative reviews is still alarming.
Speak with a Bankruptcy Attorney to Review Your Options
In many situations, wiping out debt with a Chapter 7 is the preferred route for getting back on your feet. The Plantation bankruptcy attorneys at Nowack & Olson, PLLC have a combined 40 years of experience and more than 20,000 satisfied customers. Let us guide you on the correct path for ridding yourself of unnecessary debt. Contact us today to schedule a free consultation.