http://www.ftc.gov/bcp/conline/pubs/credit/repair.htm Credit Repair: Self-Help May Be Best You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims: "Credit problems? No problem!" "We can erase your bad creditâ??100% guaranteed." "Create a new credit identityâ??legally." "We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!" Do yourself a favor and save some money, too. Donâ??t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. This brochure explains how you can improve your credit worthiness and lists legitimate resources for low or no-cost help. The Scam Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they canâ??t deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report; many simply vanish with your money. The Warning Signs If you decide to respond to a credit repair offer, beware of companies that: Want you to pay for credit repair services before any services are provided, [*]Do not tell you your legal rights and what you can doâ??yourselfâ??for free; [*]Recommend that you not contact a credit bureau directly; Suggest that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security Number; or Advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution. You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. Itâ??s a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services. The Truth No one can legally remove accurate and timely negative information from a credit report. But the law does allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act: You are entitled to a free copy of your credit report if youâ??ve been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureauâ??s name, address, and telephone number. You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents. Clearly identify each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the past six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years. When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider. You also should tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correctâ??that is, if the information is inaccurateâ??the information provider may not use it again. If the reinvestigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. Remember, there is no charge for a reinvestigation. The Credit Repair Organizations Act By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific protections for you. For example, a credit repair company cannot: make false claims about their services; charge you until they have completed the promised services; or perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees. Your contract must specify: the payment terms for services, including their total cost; a detailed description of the services to be performed; how long it will take to achieve the results; any guarantees they offer; and the companyâ??s name and business address.