Are There Services That Will Remove or Repair Credit?

If you are drowning in debt and don't think you'll be able to make your way out, you might be attracted to ads from companies that claim to remove or repair your credit. It's almost as if these companies are offering you a life preserver. Before you reach for it, beware.

Can't Remove Accuracies

The Federal Trade Commission wants consumers to know that no one can remove accurate information from your credit report -- it's illegal. If someone does make that claim, it's a scam. No loopholes exist in federal law that allows accurate reporting of bad credit to be removed. If an agency claims it can remove negative information from your credit report, you will more than likely pay the agency hundreds or thousands of dollars in fees, and your credit report will still contain the negative information.

Warning Signs

Never use a firm that asks for money upfront. That is a violation of the Credit Repair Organizations Act, an amendment of the Consumer Credit Protection Act that Congress passed after witnessing unfair and deceptive practices from credit repair organizations. Don't use a firm that advises you to dispute all the negative items in your credit report. Some firms advise this, hoping creditors don't respond. The truth is this rarely happens, and you have wasted your time and money, according to Bankrate.com. And, even if the creditor doesn't respond and the information is removed from your report on the 30th day, on day 31, or when the creditor responds, the information is back on your report. Never try to get a new identity for yourself in an effort to start fresh -- that is a state and federal felony.

Legitimate Credit Repair

Legitimate credit repair services do exist, but they can't do anything for you that you can't do yourself. The only reason to hire one is to save you time and to add professionalism. For example, credit reports often contain errors, which, according to the Fair Credit Reporting Act, you can dispute. But, it's not fun, and it can be time consuming. You have to obtain your credit report, review it, highlight the errors, document the mistake, find proof of the mistake, type a letter to the credit-reporting agency and mail it. According to Bankrate.com, correcting just one error averages four hours of time. A credit repair service can do the work for you. However, credit repair services do not have a magic bag of tricks. They can't remove or change anything on your credit report that is correct. Most information stays on your credit report for seven years, 10 years for a bankruptcy.

Steps to Take

Perhaps a better approach than paying money to a credit repair organization would be to apply that money toward your debt. Get a copy of your credit report from AnnualCreditReport.com. Report any inaccurate negative information. Make a budget and try to work out a repayment plan with your creditors. If you need help, contact a reputable credit-counseling agency through the National Foundation for Credit Counseling. A counselor can help you develop a plan or can put you on a debt-management plan where you deposit money each month with a credit counselor who takes over your debt.