Don’t Fall for 'Credit Repair' Scams!

November 10, 2021

If you’ve struggled to meet credit card payments, defaulted on loans or declared bankruptcy, it can lead to frustration (when you're denied a loan, an apartment rental or a credit card you've applied for) or penalties (interest rates can be ‘tiered’ according to your credit rating). So when you see an ad offering to help you repair or re-create your credit score by erasing bad credit information (even if it’s true), or promising to help you to start over from scratch, it can be very tempting.

Unfortunately, these offers are not what they seem to be. You can easily end up paying hundreds of dollars, without legally improving your credit score. If you have a history of late or missing payments, or have otherwise failed to live up to your financial obligations, you should know that there is no quick fix.

How the scam works

Typically, the ‘credit repair company’ will claim they can help you repair or hide a bad credit history or bankruptcy – for an up-front fee and, possibly, a continuing monthly fee. Once you pay, they’ll provide you with a nine-digit number they may refer to as a CPN (a Credit Profile Number or Credit Privacy Number), but it’s really a pirated Social Security Number (SSN) that they have purchased from someone who steals personal identities, or taken from a child. Alternatively, they might instruct you to apply for an EIN (Employer Identification Number) from the Internal Revenue Service (IRS).

They’ll tell you that using your new CPN or EIN on credit or loan applications will allow you to rebuild your credit history. It won’t. You should know it’s a federal crime to lie on a credit or loan application, misrepresent your SSN, or obtain an EIN under false pretenses. You could end up being prosecuted for it, and even going to prison. You also may have unknowingly participated in an identity theft fraud.

How to spot a scam

There are legitimate services that can help you take the steps required to start to repair a bad credit history. According to the Federal Trade Commission (FTC), the following are signals that the service you’re looking at is an illegal credit repair scam:

  • The company insists you pay them before they do any work on your behalf.
  • They warn you NOT to contact the credit reporting companies directly.
  • They instruct you to dispute negative information in your credit report, or they promise to remove it, even if it's accurate.
  • They counsel you to give false information on credit or loan applications.
  • They don’t explain your legal rights up front. (The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you, or to charge you before they've performed their services.)

What to do if you’ve already paid them

If you feel you’ve been taken advantage of by one of these ‘credit repair companies,’ you do have recourse. You can sue them in federal court for your actual losses or for what you paid them (whichever is more), and you can seek punitive damages against the company. You can also join other people in a class action lawsuit, and if you win, the company will have to pay your attorney's fees.

You should also report them. You can file a report with your state Attorney General (AG), or the Federal Trade Commission (file your complaint online at or call 1-877-FTC-HELP). They can’t pursue individual cases, but will take action if there’s a pattern of possible legal violations.


This article is designed to provide informative material and is distributed with the understanding that it does not constitute legal or other professional advice. Opinions expressed herein are subject to change without notice. Information has been obtained from sources believed to be reliable, but its accuracy and interpretation are not guaranteed.

Read More Articles