Credit Repair Scams – What They Are and How To Avoid Them

Stephanie Faris
Dolores Bernal
December 1, 2023
Gradient credit assessment concept

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Qualifying for new credit can be tough if you have a bad history.

That’s why one Texas consumer jumped at the chance to start over.

When she saw online ads promising a “Credit Privacy Number (CPN),” she signed up. With a CPN, she’d get a new number that she could then use to apply for credit.

The number looked like a Social Security number, so it should work, right?

She paid $1,500 for the number, which she immediately began using instead of her Social Security number. Her credit score began notching upward. She found her score in the 700s.

Then federal agents showed up at her work. The mother of three was facing up to 30 years in prison.

That was definitely not good news.

As it turns out, false representation on a loan application is illegal. Even though, as a consumer, we’re only guilty of trusting someone’s false promises, when we fill out an application, we usually certify that all the information presented on the application is true.

Although the Texas consumer didn’t have to serve jail time, she was forced to pay restitution and be put on probation for 18 months.

That’s the worst kind of credit repair scam. But it’s certainly not the only one.

What are Credit Repair Scams?

Your credit score is like a toilet plunger. You don’t think about it until you need to use it.

But once you need it, it becomes everything.

My credit score goes under the spotlight every time we buy a house. You need a few things to buy a house:

  • A credit score of at least 620 (for a conventional loan)
  • A five-figure down payment
  • Money for closing costs
  • Proof of income

We pay cash for our vehicles and mostly stay out of debt, so it’s easy to forget about that credit score during those in-between years. But yes, as soon as it’s time to buy a house again, you can bet I’ll be checking that credit score.

Credit repair scammers see that as an opportunity. The promise to boost your credit score almost overnight can be enticing, particularly if you pull that credit score and it’s not quite up to par.

But despite the smoke these guys blow, most credit repair services are scams. Recognizing them as such can save you loads of money and headaches.

Hand drawn credit assessment concept

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Common Types of Credit Repair Scams

Credit repair is an industry of its own, but is it for real? Here are some scams to watch for.

1. New Number Scams

What is it? A Credit Privacy Number scam issues you a brand-new nine-digit number, freeing you from the burdens associated with your own Social Security Number. You’ll be charged a large sum of money for a CPN, but it’s illegal to use it on applications. An alternate form has companies promising to issue an EIN for a new beginning. Short for Employer Identification Number, EINs are issued by the IRS to businesses that need an employer-specific number. 

How to spot it: Any alternate Social Security number promise should be immediately disregarded. You can’t get around your credit history by using a different number. In fact, doing so could land you in jail. An employer identification number is specific to businesses and issued solely by the IRS.

How to avoid it: Ignore any claims that a business can help you refresh your credit history with a new number. If you’re a business needing an EIN, you can secure one in just a few minutes on the IRS site, but this will be connected to your Social Security number, so it won’t help you escape your past.

2. Debt Consolidation Scams

What is it? Do you have debt you can’t escape? If so, debt consolidation scammers could see you as a target. These companies promise to pay off your debt in a matter of months. Instead of paying multiple loans with varying interest rates, everything will be combined. Yes, you could save on interest and reduce bills, but it comes at a cost. The debt consolidator typically asks for an upfront fee. In some cases, they have you send your payments to them rather than the creditors, only for you to find out later that nobody’s been paying those bills.

How to spot it: A legitimate debt consolidator won’t ask for upfront payments. If there is a fee, it will be disclosed, and it will be reasonable. Scammers won’t put everything in writing and will be sketchy about what’s involved. A legitimate debt consolidation company will outline the steps, which will include combining your debt so that all of your bills are paid.

How to avoid it: You don’t need help consolidating your debt. If your credit is strong enough, SEARCH FOR PERSONAL LOANS that offer a competitive interest rate and use the loan funds to pay off your balances. Don’t rule out online lenders, who tend to have competitive interest rates and less strict qualification requirements in order to attract business. A lower-interest credit card can be another way to put multiple debts on one bill.

3. Credit Piggybacking Scams

What is it? When you’re trying to build credit, it can seem like everyone else has a better score than you. That’s what this scheme capitalizes on. With a piggybacking scam, fraudsters promise to add you to another person’s credit as an “authorized user.” It sounds like a great deal. You simply ride this other person’s coattails with no authority whatsoever to use the account. According to the Federal Trade Commission, it’s a complete scam. The consumers see no difference in their credit scores and end up losing whatever money they paid for the service. 

How to spot it: Scammers will promise the moon to get your money. By simply saying they’ll raise your score by adding you to a stranger’s account, a service provider has already proven itself to be scammy. Even if this was legal, who’s to say you’d be added to the account of someone who will diligently pay that bill on time for the duration?

How to avoid it: Steer clear of any offers that sound too good to be true. When in doubt, a simple Google search will likely tell you everything you need to know about a piggyback scammer.

4. Credit Report Cleanup Scams

What is it? We’ve all seen ads promising to remove negative entries from your credit report. For the low-low price of (insert dollar amount), all those pesky bad entries will just *poof* disappear. It doesn’t work like that. If your report has negative entries that are fact, nobody can remove them. If the entries are incorrect, you can file a dispute and have them resolved yourself.

How to spot it: Anyone asking for a fee to clean up your credit report should be viewed as a scammer. You can do the work yourself in a matter of minutes.

How to avoid it: Instead of paying for a service, request your credit report from all three bureaus and go through it. If you see inaccurate entries, dispute them using the reporting link on each bureau’s website.

5. Blank Report Scams

What is it? A service promises to do all the heavy lifting for you. All you have to do is fill out a detailed form. The form collects essential information like your name, address, Social Security number, and signature. Not only can this data be used for identity theft, but you’ve just provided your signature on a blank document that could end up being a contract locking you into who knows what.

How to spot it: The scariest thing about credit repair scammers is the amount of information they can access. If someone is asking for personally identifiable information (PII), always question it. It’s better to walk away when someone wants your Social Security number or account information than to give it away and live to regret it.

How to avoid it: Be aware of the information necessary to commit identity theft. Always question someone who wants to collect that information. Instead of relying on a service that claims to need this type of information, consider doing the work yourself.

6. Loan Modification Scams

What is it? With this scam, someone promises to take an existing loan and modify it to lower your payment. While loan refinancing is a real thing, the fees set this scam apart. The lender charges exorbitant up-front fees that cut into your savings. In some cases, the lender doesn’t even pay off your loan. You only know you’ve been scammed when the lender lets you know your payment is overdue. 

How to spot it: The fees should serve as a red flag, especially if a credit repair service is shady about them. A legitimate lender will charge no fees for the service, instead making money off the interest you’ll pay on the original principal.

How to avoid it: If you have a loan you want to finance, look into legitimate lenders. This will work as a loan issued by a financial institution. The lender will pay off your balance due, then charge you interest, hopefully at a much lower rate. You should be expected to pay $0 in fees to refinance student, personal, and auto loans. Refinancing your mortgage will come with closing costs similar to what you faced when you bought the home, but other types of loans won’t.

Credit card abstract concept illustration

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How to Avoid Credit Repair Scams

Having a tough time improving your credit?

You don’t have to take your chances with a scammer. Here are some tips to help you navigate the snake-infested waters of credit repair.

1. Be Stingy with Information

There’s some information that can be disastrous in the wrong hands. It can lead to financial losses as well as identity theft. Identity theft may hurt your credit further.

Whether someone’s calling on the phone or you reached out in response to an offer, if you’re asked to provide the following, it should serve as a red flag:

  • Your full name
  • Your mailing address
  • Your birthdate
  • Your birthplace
  • Your mother’s maiden name
  • Your Social Security number
  • Any financial account numbers
  • Any password

There may be some I didn’t list above. If you sense someone’s digging for information, walk away.

Also, be careful when clicking links in an email. They can lead you to a fake website or scammy web form, and some clicks generate malware downloads that could grab information from your hard drive.

2. Boost Your Own Score

The best way to improve your credit score is to pay your bills on time and have that activity reported to the three credit bureaus.

That can take time, though. If you’re in a hurry, there are some things you can do (without relying on some credit repair service) to notch it up a few points.

First, access a copy of your credit report from the three major credit bureaus. You’re entitled to one free report per year through

Once you have the report, put it under a microscope. (Not literally.) 

Note any negative entries on your report that you don’t recognize. Then research each one. Some of your debts may be under parent companies, so you might have to track down the associated companies that go with each debt.

If there’s something you can’t track down, it’s time to dispute the entry. The process is detailed here. You’ll need to go dispute each inaccurate item separately.

The credit bureau will reach out to the original creditor for more information. This process can take a while, so be patient. 

Although it’s possible you won’t find any errors, it’s worth a try. It takes just a little extra time and can help you get your score where you need it to be.

3. Ask Plenty of Questions

If you do decide to go with a new loan or repair service, demand details before signing on the dotted line.

A reputable service will be upfront about fees, terms, and how the entire process will work if a representative isn’t honest and open, RUN!

It costs a little extra, but having a legal professional review any documents you’re about to sign can be well worth it. Online services like LegalShield, LegalZoom, and Rocket Lawyer are great for getting a quick expert legal review.

Lastly, make sure you check online reviews of any company. Unless they’re new to the scene (or have recently changed names), scammers will usually have bad reviews by the boatloads.

4. Consider Alternatives

There have never been more options for those who have struggling credit scores.

Denied a credit card? Try a SECURED CREDIT CARD. You put down a deposit that you then borrow against. In the process, you’re rebuilding credit so that you can soon qualify for a credit card that doesn’t require a deposit.

Denied a mortgage? There are home loan alternatives for those whose credit isn’t high enough to qualify for a conventional loan. They include:

  • FHA Loans: The Federal Housing Authority has a program designed to turn renters into homeowners. You can qualify for an FHA loan with a score as low as 500, as long as you’re willing to provide a 10 percent downpayment. If your score is 580 or better, you can qualify with a 3.5 percent downpayment.
  • VA Loans: Veterans, military servicemembers, and their families can qualify for a Veterans Administration loan, which gets you into a home without a downpayment. Credit score qualifications vary by lender, but you can typically get in with a score of 580 or better.

For all types of loans, it’s important to shop around. Some online lenders, local banks, and credit unions are more flexible with their requirements than corporate lenders. You may find that you can get a loan without having to put extra effort into improving your credit score.

What to Do if You’ve Been Scammed

Maybe it’s too late. A scammer already got you.

The best thing to do now is to prevent further damage. The next best thing is to prevent it from happening to others.

Here are a couple of steps to take if a credit repair scammer has your information.

1. Report It

After possible identity theft, always contact your bank. The fraud department can put an alert on your accounts…or issue new accounts if the situation merits it.

After that, is a great resource. You can report the scam, as well as get steps on what to do next.

2. Consider Identity Theft Insurance

To say identity theft is disruptive is an understatement. It can damage your credit and lead to months of cleanup.

Services like Aura, LifeLock, and IdentityForce will keep an eye out for signs of fraud. Plus, if you do someday suffer from identity theft, they’ll cover some of the cost to get things back to normal.


Improving your credit score takes time and patience. It can be tempting to shortcut the process.

But nobody can boost your credit score overnight. If someone promises they can, they’re likely scamming you.

Instead of putting your faith in credit repair services, take measures to improve your credit, even if it means tracking down a consolidation loan with a reputable lender.

✎ Related Article: Credit Score Scams – How To Identify And Avoid Them