Credit Counseling Scams to Avoid

As with most business types and industries out there, there are unscrupulous individuals who have set up shop and bill themselves as "credit counseling" services in order to take advantage of the desperate. These companies will offer you the world in terms of providing quick (or instant) relief from your debt and deliver next to nothing in return for your money. There are ways of spotting these companies and avoiding them, however if you will just proceed with a little knowledge and caution. Here are some common tricks they use that can help you spot them:

Using Religion

This is a common way of taking advantage of Christians, usually. This is not to say that there aren't legitimate Christian credit counseling services out there, but many of them are simply using the title in order to lure in the unwary. With a few key verses scattered through their promotional material and on their website like "Proverbs 22:7 The rich ruleth over the poor, and the borrower is servant to the lender" These unscrupulous companies seek to convince you that they know the work of God and are trying to help fellow Christians. They will often bill themselves as being non-profit, but the regulations regarding whether or not a company can call itself nonprofit or not are very loose and allow them to still rake in a tidy amount from those that sign up for their services.

Asking for Upfront Payment

There is no more clear red flag when dealing with a credit counseling service than if they ask you for money upfront before they have really even taken stock of your situation. Federal laws prohibit this practice and you should hang up when speaking with such a company without another word.

A legitimate credit counseling service will conduct a thorough interview with you to determine your financial situation before even deciding whether or not their services can help you. After a careful review of your financial situation, they will provide you with a detailed plan of action for improving your credit situation, letting you know exactly what they will do for you and when and how much the service will cost. Then, with your approval, they will get started on that course of action, and set you up on a payment plan as agreed.

Promising the Moon

There is no legal way to repair credit instantly, quickly or overnight. It is a time-consuming process that requires patience and dedication both from you and the counseling company that you sign up with. Scam companies out there will tell you that they have secret ways of fixing your credit "that the credit reporting agencies don't want you to know about." Beware such language. It is a violation of Federal law to misrepresent any information to the credit reporting agencies, attempt to remove a legitimate debt through deception or to change your name or social security number in order to escape financial obligations.

The tactics of these so-called credit counseling scams can not only leave you ripped off of your hard-earned money, but what little work they do (if any) for your credit may actually end up harming it rather than helping. Check with the Better Business Bureau before signing with any service or better yet, put your mind at ease and know that the services offered in our network are safe, vested and secure for you to use. Learn about managing your credit report here.