Credit repair companies are supposed to be on your side, right? Not always. Some firms may not work in your best interest. Some firms may mislead you with bad information or have practices that you should be wary of, even if they work in your favor.

Of course, most credit repair companies are legitimate and help you to learn and apply legitimate methods to rebuild your credit score. But working with one of the few bad apples could put a significant dent in your wallet before you notice it.

If you’re considering hiring a credit repair company, look out for the seven common lies to avoid hiring a bad apple.

1. You need to pay before we start working.

Asking you to pay an upfront fee before any services have begun is a huge red flag. Also, it’s illegal. Under the Credit Repair Organizations Act, credit repair companies can’t charge advance fees before rendering services.

Upfront fees could run you as little as a couple of hundred dollars or into the thousands with some companies.

For example, the Federal Trade Commission sued Doug and Julie Parker, owners of a Texas-based credit repair firm called RMCN Credit Services, Inc., in 2011. The FTC claimed the couple charged customers a staggering $2,000 retainer fee before they completed any work. In the end, the Parkers were fined $400,000 by the federal watchdog.

Don’t pay a penny until the credit repair company begins work on your case.

2. You’ll need a new “credit identity.”

Run for the Consumer Financial Protection Bureau if you hear this one. You only get one shot — one opportunity — at a credit identity, so creating a “new” one isn’t truly possible without some shady practices.

For example, the company may ask you to apply for an Employer Identification Number to start over with brand new credit. This practice is also illegal. An EIN is the Social Security number for registered businesses and isn’t a substitute for your Social Security number.

The company might also offer you a brand new nine-digit “credit profile number” that you can start all over with. The FTC warns this could be a child’s stolen Social Security number. This practice is also illegal, and you’d be committing identity theft if you fall for it.

To get this to work, the company may also ask you to stop using your own Social Security number. While you are flaunting your “new credit identity,” your own score won’t be repaired and may even worsen if you choose to neglect it.

3. You should inflate your household income to get new credit.

Some credit repair organizations may also ask you to lie on credit applications in order to qualify for more credit. For example, they may ask you to report more income than you earn. It’s illegal to make false statements on credit applications.

4. It’s OK to dispute correct information on your credit report.

The credit repair company might also simply lie to you about the rules surrounding your credit report. They may ask you to dispute every negative item, including information you know is correct on your credit report, and say you can fight the mark even if it’s true.

That is a lie. You can and should dispute a negative item you think is an error and fight to have it removed to benefit your score. But if the mark is negative because you were, indeed, late on your bill, or did, in fact, file for bankruptcy, you cannot file to have it removed by claiming it is inaccurate.

5. We can get you a perfect credit score.

Don’t drink the Kool-Aid. If a company promises they can improve your score or get it to a specific number, don’t believe their hype.

In 2015, the FTC filed suit against a company called FTC Credit Solutions for making these exact kinds of claims. The company’s representatives told customers they would get their credit score into the 700s and promised any negative credit report information could be removed. On top of that, they also charged advance fees before rendering any services. The case was settled very quickly to the tune of a $2.4 million penalty against the defendants.

6. We are affiliated with the U.S. government.

Some firms will falsely claim they are affiliated with the FTC or another government agency. You should double-check before you swallow this one to avoid trouble. Some firms really are government approved, and they can be found listed on the U.S. Trustee Program website. If you’re thinking of working with a firm that isn’t on that list, you might want to reconsider.

For example, if you are filing bankruptcy, you’ll be required to get credit counseling from a government-approved organization. If the firm you’re working with isn’t approved, you may find your process delayed.

7. You can’t contact credit bureaus on your own.

If a company ever tells you that you are not allowed to contact the credit bureaus on your own, walk away — fast. The credit repair company isn’t the only way to contact the credit bureaus. According to the law, any consumer can contact credit bureaus directly without a third party.

In addition, you have the right to access your credit report from each of the three credit bureaus once per year for free. You can request a copy from

If you’ve been rejected for anything for credit-related reasons, you have 60 days to request a free copy of your report. This enables you to keep potential creditors honest.

The Bottom Line

If you’re in need of a credit repair company, you should be cautious about what firms tell you, especially when it could affect your credit.

You can avoid all of these lies by working on your credit on your own. Credit isn’t too complicated, and you can repair your score all by yourself.

MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.