These 4 Credit “Fixes” Can End in Financial Ruin—Or Even Jail Time

Learn how to protect yourself from fraudulent credit repair schemes. This article unpacks four credit “quick fixes” to stay away from.

Key Takeaways

Trying to repair your credit can feel like an impossible cycle. It’s challenging to get approved for loans or credit cards when you have poor credit; yet these are the very tools that are supposed to help you improve your credit in the first place.

If you’re struggling to repair your credit, companies promising to erase your problems overnight might catch your eye. Unfortunately, if you see an offer that looks too good to be true – it probably is. 

Credit repair scams prey on people desperate to fix their credit. They can drain your finances and risk damaging your credit score even further. In the worst case scenario, they can even lead to jail time. 

As you work to repair your credit score, understand the warning signs of a fraudulent credit scheme – and stay away from these four “quick fixes.”

1. Credit Profile Numbers (CPNs)

If you come across an online ad or social post promising “a new credit identity” to fix your financial woes – steer clear. Chances are, you’ve encountered a credit profile number (CPNs) scheme. 

What is a CPN?

Also known as credit privacy numbers, a CPN is a nine-digit number formatted like a social security number (xxx-xx-xxx). Credit repair scams market CPNs as a way to wipe your credit history clean and rapidly improve your credit score. 

Sellers instruct buyers to use their CPN in place of their social security number when applying for new credit. This way, lenders might not catch negative activity linked to a borrower’s social security number – like a bankruptcy or default loan. 

For consumers struggling with poor credit, CPNs can seem like a crucial second-chance. But using one can land you in serious hot water. 

Using a CPN on a credit application is illegal 

Some CPNs are number combinations that haven’t been issued as social security numbers. Others are linked to individuals without a credit history, like children, elderly people, or prison inmates. No matter where they come from, CPNs can lead to serious legal trouble. 

Even if a CPN seller says otherwise, misrepresenting your social security number on a credit application is considered false representation – and it’s a federal crime. Using a CPN that is linked to another individual can also be considered identity theft. 

How to avoid CPN scams

  • Never use anything other than your social security number on a credit application – and avoid anyone advising otherwise. 
  • Avoid companies and individuals selling CPNs to improve your credit approval odds or fix poor credit – regardless of where the CPN came from. 
  • Avoid companies and individuals offering “credit segregation” through use of an Employee Identification Number (EIN) – it is illegal for consumers to use an EIN in place of their social security number.  
  • Avoid any offer that promises a “new credit identity” or to wipe your credit slate clean.

2. Credit Washing Schemes

CPNs aren’t the only credit “quick fixes” that target vulnerable consumers. Beware of companies that promise to wipe negative marks from your credit report altogether. These offers are usually illegal credit repair schemes called credit washing.

What is credit washing?

Credit washing schemes lure consumers in by promising to rapidly reverse negative credit history. Their solution? Claim the account isn’t yours.

Under the Fair Credit Reporting Act (FCRA), if a consumer files an identity theft claim with a lender or credit bureau, the institution must block reporting of the disputed accounts within four days. The institution then has a narrow window of time to review the claim’s validity. Otherwise, it’s settled in favor of the consumer.

These protections help consumers minimize the damage of legitimate identity theft. Unfortunately, fraudulent credit building scams use credit washing to exploit these protections.

Credit washing is the process of removing accurate negative information from a credit report by falsely claiming identity theft. If the institution cannot disprove the claim within the required time frame, the activity is removed from the credit report. 

Credit washing might seem like a quick way to boost your credit score or erase outstanding debt. But disputing accurate information on your credit report is against the law. 

Whether you file a fraudulent claim on your own, or a credit repair company submits one on your behalf – credit washing is illegal.

How to avoid credit washing

  • Never dispute accurate information on your credit report or file false identity theft claims in order to repair your credit.
  • Avoid credit repair companies that promise to remove accurate credit information on your behalf. 
  • Never allow a credit repair company to act on your behalf without verifying and approving the specific services. 

3. Credit Repair Scams

Fixing your credit may feel like a daunting task. When credit repair companies offer to help you through the process in exchange for a fee, you may find these services appealing. 

Unfortunately, many credit repair companies prey on desperate consumers. Credit repair scams can cost you serious cash and still leave your credit score unchanged. At their worst, you could wind up breaking the law – or the victim of identity theft. 

Not all credit repair companies are scams, but it’s important to know the red flags. A fraudulent credit repair company may:

  • Demand up-front payment: Consumer protection laws prohibit credit repair companies from collecting payment until their service has been completed. 
  • Guarantee results: It’s illegal for credit building companies to guarantee results or make false promises to improve your score or erase negative credit history. 
  • Dispute accurate negative information: Reputable companies can help you remove errors from your report, but will never offer to dispute accurate information.
  • Ask you to provide false information: It is illegal to provide false information on your credit report, even if a company does it on your behalf. 
  • Lack transparency: Credit building companies must explain your legal rights and outline, in writing, the specific services they will provide. 

4. Predatory Loans

You might think a loan can help you get caught up on bills or cover unexpected expenses between paychecks. But predatory lenders target people in vulnerable financial situations – and their “quick fixes” can lead to a painful cycle of debt. 

Predatory lenders use unethical tactics to drain borrowers of their financial assets. A few tell-tale signs of a predatory loan are: sky-high interest rates; confusing or unclear payback terms; and a rushed or aggressive application process

Predatory lenders usually don’t report positive repayment to the credit bureaus. That means, even if you pay your debt back as agreed, it won’t help your credit score. By design, this keeps vulnerable borrowers bound to exploitative lenders. 

Learn more: How to protect yourself from predatory loans

Repair your credit with StellarFi

You don’t have to choose between poor credit and predatory credit repair schemes. StellarFi improves factors that make up 80% of your credit score, like credit age and on-time payments. Unlike secured credit cards, there’s no security deposit.

With Stellar, you can build positive credit history with the bills you pay each month already – like rent payments, your phone bill, and even your Netflix subscription. Signing up only takes a few minutes, and there’s no credit check or added fees. 

Ready to improve your credit? Check out StellarFi and get started today. 


StellarFi (StellarFinance, Inc.) and its affiliates do not provide financial, tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own financial, tax, legal, and accounting advisors before engaging in any transaction. StellarFi receives a referral fee from the partners mentioned in this article.