Debt that outpaces your income can feel like a weight on your shoulders that keeps getting heavier. Plus, that over-your-head debt can destroy your chances of owning a home, starting a business, or buying a dependable vehicle. Debt consolidation can help, but scammers who tout debt relief and credit repair are out to get you deeper in debt. Here's how to spot debt relief scams, avoid them, and what you can do with some help from One Nevada.
How Debt Relief Scams Work
These scams target individuals and families who may have a lot of credit card debt or other types of higher-rate loans. The criminals simply pull a credit report, find their victims, and begin to barrage them with promises of debt relief and credit repair — all for a fee. The victims are often desperate and willing to pay any price for a positive outcome. The scammer takes their fee, fails to deliver on any of the promises, and leaves the victim further in debt. Those promises include:
- Debt repair services that can instantly increase credit scores
- Removal of negative information on a credit report
- Reduction in credit card balance and/or rates
If you're told that a company can repair your credit and relieve you of some or all of your debt for an up-front fee, delete the email, hang up the phone, or shred the mailing. Especially if the service claims to be affiliated with your credit card or financial institution.
Top 4 ways to avoid a debt relief scam:
- Never pay an upfront fee
- Don't trust a service that guarantees a better credit score fast
- Don't listen to a company that tells you to cut off all communication with creditors
- Don't believe that a service can fix negative credit information.
How to Fix Your Credit and Lower Your Debt (over time)
Yes, there are legitimate credit repair services out there. Before you use one, do your research with the Better Business Bureau. Or stop by One Nevada. We can point you in the right direction.
Fixing your credit takes time. As long as you are not late with your debt payments, you may see positive movement in your overall score. Other ways to repair your credit include:
- Review your report. Get a free copy of your report from each reporting agency at annualcreditreport.com or call 877.322.8228.
- Looking for errors and fixing them. Look for duplicate accounts and any missed payments.
- Fix the Errors. Contact the reporting agency about the error. If your dispute is valid, it will get fixed. And you'll have saved a lot of money.
Relieve Your Debt (and build your credit)
Relieving some of your debt requires honest conversations and on-time payments. Start by calling your credit card company or financial institution and ask them about debt relief. They might be willing to lock your rate and set you up with monthly payments you can afford.
Connect with Law Enforcement
Debt relief scams are a crime if the company does not provide the services promised. If you or someone you know falls victim to this crime, report it to the Federal Trade Commission (FTC) and the FBI's Internet Crime Complaint Center (IC3).