You may have received a notification from someone claiming that they can fix your credit score in a matter of days. They promise a clear record, with all negative information removed.
Unfortunately, this is too good to be true. We have a look at the legality of these organisations, how to identify a credit repair scam, and how you can fix your own score, legally.
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Charging to repair credit scores is illegal
According to Annelene Dippenaar, chief legal and compliance officer at Experian South Africa, you must be cautious of businesses that claim they can improve or fix your credit score overnight, especially for an upfront fee.
“These types of scammers can often be found on popular classifieds websites and social media, or even distributing fliers in your area or placing ads in local papers,” says Dippenaar.
She explains that, in South Africa, charging consumers an upfront fee to fix credit reports is illegal. This is documented in schedule 1 of the Consumer Protection Act, as well as the National Credit Act.
READ MORE: How to identify an investment scam
Further signs you’re dealing with a credit repair scam
Dippenaar points out that scams can take many different forms, from simple emails or SMSs to advertisements. While this is not an extensive list, she highlights the following further signs that opportunists may be trying to scam you:
- They promise overnight credit report repair and score improvement. Credit scores take time to change and they usually don’t show improvements within a few days or weeks.
- They promise to remove information that is accurate. Information that is inaccurate, for example, due to error or fraudulent activity on your name, can be removed after a dispute or investigation process, which is offered for free by a bureau. No one other than a bureau can remove information, and they will not remove information that is accurate and current.
- They discourage you from contacting the bureaus on your own to resolve the issue.
- They do not explain the process, the role that they will play, and the benefits to you. They do not explain that there is a free process available.
- They recommend you dispute your credit report information without having seen your credit information or verifying the validity of this data with your credit providers.
You can fix your own credit score
Dippenaar says that all credit bureaus offer a free credit information dispute process. The first step is getting a copy of your report.
“South African credit bureaus are required to offer one free credit report to consumers a year. Some bureaus, like Experian, offer unlimited free and full credit reports,” says Dippenaar.
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Next, she says that you should check the information on your report. If there is any incorrect information, you should contact the bureaus directly to dispute it.
When contacting a bureau, she says that you should supply the following documentation:
- Copy of your ID document (or passport if you’re a foreign national)
- Proof of address (not older than 3 months)
- Any supporting documentation of the dispute (such as a settlement letter)
Dippenaar says that the credit bureaus will then investigate the dispute with the data provider, and this investigation can take up to 20 business days.
“It’s important to note that even if a credit repair agent helps you fix your credit report, they would need to follow the same process, supply the same documentation, and take the same amount of time – there is no special process for credit repair agencies,” says Dippenaar.
“A credit bureau will only change your profile upon receiving confirmation from an information provider that the change should be made, or if the credit provider cannot provide evidence that the data on your report is accurate,” she explains.
“If the dispute is successful, the credit bureau will notify all other registered credit bureaus of the outcome, and the other bureaus will also update the data on your profile held by them,” she adds.
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