Credit repair scam warning signs, including CPNs
Part of our credit repair rules guides. Start with Your rights under the Credit Repair Organizations Act.
The FTC and the CFPB describe a consistent set of warning signs for credit repair scams. Knowing them, and knowing what you can do yourself for free, can help you spot an offer that breaks the law.
What you can already do for free
Scams often depend on you not knowing your own rights. Under the Fair Credit Reporting Act, disputing errors on your credit reports is free. The FTC says you can dispute mistakes or outdated information with both the credit bureau and the business that reported it, and it offers sample dispute letters. The CFPB offers sample letters too.
The FTC also notes that accurate, current negative information generally can’t be removed from your report, by a credit repair company or anyone else. For the dispute process itself, see how to dispute credit report errors.
Warning signs the FTC and CFPB describe
Be careful if a company does any of these things:
- Wants payment before it helps you. The CFPB’s rule of thumb is simple: don’t pay upfront. Federal law bars a credit repair organization from charging or receiving payment for a service before that service is fully performed.
- Tells you not to contact the credit bureaus directly.
- Tells you to dispute information you know is accurate, or advises disputing everything on your report, even items that are correct and timely.
- Tells you to lie on credit or loan applications.
- Tells you to file a false identity theft report. The FTC calls that a crime.
- Doesn’t explain your legal rights, or won’t tell you what you can do for yourself.
Promises no one can keep
The CFPB says no one can promise a specific credit score increase or take accurate, current negative information off your report. A company that claims it can is showing a warning sign.
Rules for services sold by phone
The CFPB says that under the Telemarketing Sales Rule, a company selling credit repair by phone can’t charge a fee until after the date it said it would deliver results. It also has to give you a consumer report generated more than six months after the claimed results.
New credit identity offers and CPNs
The FTC says any company that promises to create a new credit identity, or to hide bad credit or a bankruptcy, is running a scam. If someone offers you a “CPN,” a “credit privacy number,” or any other number to use instead of your own Social Security number on credit applications, that warning applies.
According to the FTC, these schemes often use stolen Social Security numbers, or Employer Identification Numbers obtained from the IRS under false pretenses. Using a number other than your own to apply for credit won’t work, and it could lead to fines or prison.
Federal law also bars anyone from making statements meant to change a consumer’s identification in order to hide accurate adverse credit information that isn’t obsolete. It also bars advising a consumer to make untrue or misleading statements about their credit to credit bureaus or lenders.
How scammers ask to be paid
The FTC says scammers often ask you to pay with cryptocurrency, a wire transfer or gift cards. Money sent these ways is hard to get back. If you’ve already paid, act as soon as you can, because the sooner you act, the better your chances. The FTC has guidance on trying to recover money you’ve lost to a scam.
Where to report a scam
- The FTC at ReportFraud.ftc.gov
- Your state attorney general
- Your state’s consumer protection office
- The CFPB, through its Submit a Complaint page or at (855) 411-2372
If you recently signed up for a credit repair service, the CFPB says you can cancel within three business days at no charge. States can also have their own laws on credit repair, so check with your state attorney general. To learn more about the federal rules, read about your rights under the Credit Repair Organizations Act.
The short version
- Disputing errors on your credit reports is free, and you can do it yourself.
- Be wary of any company that wants payment before it performs its services, tells you to avoid the bureaus, or tells you to lie or dispute accurate information.
- No one can take accurate, current negative information off your report or promise a specific score.
- Offers of a new credit identity, including so-called CPNs, are scams, and using another number on credit applications can lead to fines or prison.
- Report scams at ReportFraud.ftc.gov, to your state attorney general, or to the CFPB.
Sources
- FTC: Fixing Your Credit FAQs
- CFPB: How can I tell a credit repair scam from a reputable credit counselor?
- FTC: Looking to fix your credit? An illegal credit repair scam isn't the answer
- 15 U.S. Code 1679b: Prohibited practices
General information, not legal or financial advice. Laws and government guidance change, so check the sources above for the latest.