Key facts
- Asking a credit card company for a credit limit increase can help improve a borrower's financial picture.
- Credit repair scams promise to improve credit scores through illegitimate means, such as removing accurate negative information or creating new identities.
- Scammers often charge upfront fees for credit repair services but fail to deliver results.
- Examples of credit repair scams include auto loan modification, credit card debt relief, and credit piggybacking.
- Scammers may impersonate credit card companies via text alerts to obtain sensitive financial information.
- Legitimate credit repair organizations are typically nonprofit and do not charge upfront fees.
Consumers seeking to improve their credit scores can request a credit limit increase from their credit card company, which can positively impact their financial profile on paper. However, this process requires caution due to the prevalence of credit repair scams.
These scams often involve individuals or companies promising to improve credit scores through illegitimate methods, such as removing accurate negative information or creating new credit identities. Scammers frequently charge substantial upfront fees but fail to deliver on their promises, leaving victims in a worse financial position. Examples of such scams include auto loan modification schemes, fraudulent debt relief programs that falsely promise to eliminate credit card debt within 12-18 months, and credit piggybacking, also known as tradeline renting.
Furthermore, consumers must be wary of text alerts that appear to be from credit card companies. Criminals often use pretexting, mimicking legitimate financial institutions, to trick individuals into revealing sensitive information like card numbers, expiration dates, and PINs. Money expert Clark Howard advises never to answer calls or respond to texts from unrecognized numbers and to independently verify any suspicious activity by contacting the financial institution directly using a known, trusted number.
Legitimate credit repair organizations are typically nonprofit entities that offer free tools and seldom, if ever, request upfront payments. The Federal Trade Commission (FTC) has taken action against fraudulent companies, such as Financial Education Services, which was found to have defrauded consumers of over $213 million through a sprawling credit repair scheme involving upfront and monthly fees.