The Credit Repair Trap That Cost People Nearly $200 Million

You never have to pay upfront to fix your credit

The Federal Trade Commission (FTC) says a network of 17 related companies scammed people out of nearly $200 million. The operation ran under the name Credit Glory, and a federal court has temporarily shut it down.

Here is the most important thing to know: legitimate credit repair is free to do yourself. And under federal law, a credit repair company cannot charge you before it does the work. Any company that asks for money upfront is breaking the rules.

This scheme, according to the FTC, did exactly that. It charged illegal upfront fees and recurring charges, then failed to deliver the results it promised.

How the scam worked

The FTC says the operation used paid Google search ads to catch people who were searching for information about debts they owed. When you clicked, you thought you were reaching your actual creditor or debt collector. Instead, you reached the scam's telemarketers.

Those telemarketers pretended to be legitimate debt collectors or creditors. They promised to boost your credit score by removing negative items. The FTC says they even filed false identity theft reports on a government website without people knowing, which did not improve anyone's credit.

The scheme targeted vulnerable people, including military servicemembers who owed money to military-related creditors like the Army and Air Force Exchange Service and USAA.

The red flags to remember

The FTC's case points to warning signs you can use with any credit repair offer. Watch for these:

An upfront fee before any work is done. This is illegal under the Credit Repair Organizations Act. A small charge (even a dollar) to verify your identity or review your report is a classic setup.

A promise to remove accurate negative items or guarantee a specific score jump. No one can legally promise that.

Recurring charges you did not clearly agree to, and a company that keeps billing you until you cancel and denies refunds.

A caller who claims to be your creditor but pushes a credit repair service instead.

The free way to fix your credit

You can do everything a credit repair company does, at no cost. Start by getting your free credit reports and checking for errors. If you find a mistake, you have the legal right to dispute it directly with the credit bureaus for free.

If you are struggling with debt, a nonprofit credit counseling agency can help you make a plan, often at little or no cost. Be careful to separate free government tools and nonprofits from paid services that make big promises.

OpenFinancial is not a bank or a government agency. We just point you to the free, official path so you keep your money.

Frequently asked questions

Is credit repair a scam?

Not all of it, but the FTC warns that companies charging upfront fees or promising to remove accurate negative items are breaking the law. You can dispute credit report errors yourself for free.

Can anyone legally remove accurate bad marks from my credit report?

No. Accurate negative information stays on your report for a set time. Any company promising to erase it or guarantee a score jump is not being honest.

How do I dispute a credit report error for free?

Get your free reports at AnnualCreditReport.com, then file a dispute directly with the credit bureau. There is no cost and you do not need a paid service.

I think I was charged by this scheme. What can I do?

Report it at the FTC's consumer site and dispute the charges with your bank or card company. The FTC action may lead to further steps for affected consumers.