Legal Credit Help

Consumers who suffer from credit problems are frequently desperate. Unscrupulous companies take advantage of those who need the most help by advertising credit relief in exchange for high fees, and then cannot deliver what was promised. Fortunately, there are legal solutions that consumers can use to help reestablish a good credit history.

What's Legal

You should order your credit report at AnnualCreditReport.com and examine it carefully. You are legally entitled to one free copy from each bureau per year. You can correct inaccuracies yourself. Educate yourself about what can and can't be on your report by calling the National Foundation for Credit Counseling (NFCC), a nonprofit consumer group, and the Federal Trade Commission. Each have websites with a wealth of free information. The NFCC also offers counseling and management programs--that require a a fee--if you have current credit card debt or require housing counseling.

What's Not Legal

Companies that offer to "remove bankruptcies" or "repair credit" are frequently illegal and a waste of money. You can clean up your own credit by yourself, for free. It's also illegal if a company encourages you to get a new taxpayer identification number--an EIN--to reestablish credit. A company that says they can convince the creditor that you don't owe the debt is acting unlawfully. In general, be wary of any organization that collects hefty fees up front.

Debt Consolidation, Management and Bankruptcy Options

If your credit problem is really a debt problem, you should start by calling the NFCC for consolidation or management options. They offer free consultations and can enroll you in a program so you can pay your debts back with easier terms. The NFCC does not offer loans. If bankruptcy is your only option, you should contact a reputable attorney for advice. Check the Better Business Bureau (BBB) website, which is free to use, to find safe recommendations.

Tips for Reestablishing Credit

You can take your own actions to improve your credit legally. One way is to get and use a credit card, a secured card if necessary, and use it regularly. Only use about 30 percent of the total credit line and pay it on time, every month. Request a small credit limit, such as $500, so you don't get in over your head.

Examine your credit report and contact the bureaus to resolve issues. For example, late payments have a seven-year life and bankruptcies have a 10-year life. Anything beyond that time frame should be eliminated from your report. Pay down loans, especially those that are in collection, as quickly as possible. Finally, settle down and wait. A long credit history with on-time payments from the same issuers is the last dose of credit medicine you'll ever need.