"Credit repair" as advertised on the radio, TV, and Internet tends to be, at best, a waste of money and, at worst, a scam that would simply defraud you or (perhaps worse) involve you in fraud yourself. Even if a credit repair company is legitimate, there's nothing they can legally do that you can't do yourself at no cost. This is because there really is no legal way to "repair" bad credit if the history thereof is accurate--only time and ongoing responsible credit management can do that.

        Credit repair companies can do no more for your credit legally than you can do it yourself. And though they can't provide you with a clean report, some may encourage you to violate federal law. These credit repair operations work by seeking out consumers who have been denied loans or credit based on their poor credit histories, or people who have filed for bankruptcy. These repair companies promise to provide consumers with instructions on how to develop a new credit identity. This method of credit repair is called "file segregation."

        In this file segregation scam, the so-called credit repair companies recommend that you get an Employee Identification Number (EIN) or Individual Taxpayer Identification Number (ITIN) and they encourage you to use it in place of your true Social Security number, which is illegal.

Your legal rights

        The Federal Fair Credit Reporting Act guarantees your right to dispute inaccurate information in your credit report free of charge, so if any of the problems you've had are due to inaccurate information, you can file a dispute with one of the nation's national credit reporting agencies to have it corrected or removed. There are three credit agencies:
- Equifax www.equifax.com,
- Experian www.experian.com,
- and TransUnion www.transunion.com.

        If the information is accurate, however, you'll need to focus on building better credit for the future rather than trying to have it removed from your report. Most lenders are primarily interested in your payment patterns for the past two years, so if you begin now to pay every bill on time it can have a positive impact on your credit relatively quickly.

        Only time and establishing a positive credit history can "clean up" your credit. One of the best first steps to getting your credit back on track is seeing what is on your credit report. This way, you can take steps to dispute any inaccurate information that may be contained on your report and, at the same time, assess your current credit debt.

        The next step might be to contact old accounts that carry outstanding debt and arrange payment plans. As you begin to manage your debt successfully, you will also check your credit report on a regular basis to make sure your good efforts are being reported.

Note: This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Sources: From credit report, please visit FreeCreditReport.com, Equifax, Experian, and TransUnion.