Credit Repair Scams: How to Spot Them
The $51M in FTC fines, the CPNs that are stolen SSNs, the "609 letter" myth — and what actually works (for free).
No company can legally do anything to your credit report that you can't do yourself — for free.
That's not opinion. That's federal law. Yet the credit repair industry generates hundreds of millions of dollars annually by convincing desperate people otherwise.
This guide exposes the most common scams, explains why they don't work (or are outright illegal), and shows you what actually does work — without paying anyone.
The Core Truth About Credit Repair
⚠️ What the FTC Says
"No one can legally remove accurate and timely negative information from a credit report." — Federal Trade Commission
Legitimate credit repair is limited to ONE thing: disputing inaccurate information.
If the information is accurate — you really did miss that payment, you really do owe that debt — no company, no letter, no "secret" can make it disappear legally.
Credit repair companies just send dispute letters. That's it. The same letters you can send yourself for the cost of a stamp (or free online).
Scam #1: Credit Privacy Numbers (CPNs)
🚫 The Scam
Companies sell "Credit Privacy Numbers" or "Credit Profile Numbers" as a legal way to start fresh with a new credit file. They claim it's a government-approved alternative to your SSN.
The Reality
CPNs are almost always stolen Social Security Numbers — typically from children, elderly people in nursing homes, or deceased individuals. Using one on a credit application is federal identity theft and bank fraud.
The consequences:
- Identity theft charges (stealing someone's SSN)
- Bank fraud charges (lying on credit applications)
- Wire fraud charges (if done electronically)
- Up to 30 years in federal prison
There is no such thing as a legitimate CPN. The only valid identifier for U.S. credit is your Social Security Number or ITIN (Individual Taxpayer Identification Number).
FTC enforcement: "The Credit Game" was shut down and ordered to pay $3.5M+ for selling CPNs. The operators face federal charges.
Scam #2: The "609 Letter" Magic
🚫 The Scam
Companies sell templates claiming "Section 609 of the Fair Credit Reporting Act" forces credit bureaus to delete any item they can't prove with original signed documents. They promise 30-day deletion of all negative items.
The Reality
Section 609 has nothing to do with disputes. It simply gives you the right to request a copy of your credit file. The actual dispute process is in Section 611 — and it doesn't require original documents, just a "reasonable investigation."
Credit expert John Ulzheimer (former Equifax employee): "The bureaus do nothing different for 609 letters. They're processed like any other dispute."
Bureaus are data repositories, not document warehouses. They don't have your original signed contracts — and they're not legally required to. They verify information with the creditor who reported it.
What actually works: Regular disputes under Section 611, which you can file free at all three bureau websites.
Scam #3: Credit Sweeps (Fake Police Reports)
🚫 The Scam
"Credit sweep" services promise to delete ALL negative items in 30 days by filing identity theft claims, claiming every negative account was opened fraudulently.
The Reality
Filing a false police report is a crime. Bureaus investigate identity theft claims and frequently refer fraudulent reports to law enforcement. The accounts eventually get reinstated — often with fraud flags that make things worse.
This scam exploits FCRA Section 605B, which requires fast removal of identity theft items. But the law also has penalties for fraudulent claims.
Consequences: Filing a false police report is a misdemeanor or felony depending on the state. Making false statements to federal investigators adds federal charges.
Scam #4: Upfront Fees
🚫 The Scam
Companies demand payment before doing any work. "Pay $1,500 now and we'll fix your credit."
The Reality
This is illegal under federal law. The Credit Repair Organizations Act (CROA) explicitly prohibits credit repair companies from charging fees before services are fully performed.
If any company asks for payment upfront, they're breaking federal law. Walk away.
Scam #5: Guaranteed Removals
🚫 The Scam
"We guarantee removal of all negative items" or "100% money-back guarantee on deletions."
The Reality
No one can guarantee removal of accurate information. This is another CROA violation — the law specifically prohibits making statements that mislead consumers about what credit repair can do.
Legitimate dispute success rates depend entirely on whether errors exist. If your report is accurate, there's nothing to remove.
Recent FTC Enforcement Actions
| Company | Penalty | Violation |
|---|---|---|
| Key Credit Repair | $51M judgment | Upfront fees, false promises |
| The Credit Game | $3.5M+ / Shut down | Selling CPNs, fake documents |
| Financial Ed Services | $12M / Banned | Illegal fee structures |
| Alex Miller Credit Repair | Shut down | Fake ID theft reports, CPNs |
Red Flags to Watch For
Walk away immediately if you see any of these:
- Upfront payment required — Illegal under CROA
- "Guaranteed" deletion of accurate items — Impossible and illegal to promise
- Mentions of CPNs or "new credit file" — Federal crime
- "Section 609" as a magic solution — Misrepresentation
- Pressure to act now — Scammers create urgency
- Won't provide written contract — Required by CROA
- Tells you to dispute accurate items — Fraud
- $79-150/month for "services" — You can dispute free
What Actually Works (For Free)
Here's the thing: everything a legitimate credit repair company does, you can do yourself in about an hour.
✓ Free DIY Credit Repair
- Pull your reports — Free at AnnualCreditReport.com (weekly access)
- Identify errors — Wrong balances, wrong dates, accounts not yours
- File disputes online — Each bureau has free dispute portals
- Wait 30 days — Bureaus must investigate and respond
- Follow up — If not resolved, file with CFPB
The data: CFPB complaints have a 99.6% response rate, with 52% resulting in relief (corrections, deletions, etc.). That's free and often more effective than paid services.
Read our complete DIY dispute guide →
Legitimate Help Does Exist
If you genuinely need help, these are legitimate options:
- Non-profit credit counseling — NFCC member agencies offer free or low-cost help
- Legal aid societies — For FCRA violations or debt collection issues
- CFPB resources — Free dispute templates and guides at consumerfinance.gov
- State attorney general — Can help with scams and FCRA violations
Avoid any for-profit company that charges ongoing monthly fees for "credit monitoring" bundled with "repair."
The Psychology of Credit Scams
Scammers exploit real emotions: shame about bad credit, fear of rejection, desperation to qualify for housing or loans. They offer a "clean slate" fantasy — the idea that past mistakes can be erased overnight.
The truth is more boring but more effective: credit builds slowly through consistent behavior. There are no shortcuts, only strategies. The strategies are free. The shortcuts are scams.
The Bottom Line
Rule 1: No one can legally remove accurate negative information.
Rule 2: Anything a credit repair company does, you can do free.
Rule 3: CPNs are federal crimes, not loopholes.
Rule 4: Upfront fees are illegal under CROA.
Rule 5: "609 letters" are not magic — they're regular disputes.
Save your money. Dispute errors yourself. Build credit the real way. It's slower, but it actually works — and won't land you in federal prison.