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 credit 

— 100% guaranteed.”

 “Create a new credit identity 

— legally.”

 “We can remove bankruptcies, judgments, liens, 

and bad loans from your credit file forever!”

Do yourself a favor and save some money, 

too. Don’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 creditworthiness and gives 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 can’t deliver. After you pay 

them hundreds or thousands of dollars in fees, these 

companies do nothing to improve 

your credit report; most simply vanish 

with your money.

The Warning Signs

If you decide to respond to a credit 

repair offer, look for these tell-tale 

signs of a scam:

 companies that want you to pay for credit repair 

services before they provide any services. 

 companies that do not tell you your legal rights 

and what you can do for yourself for free.

 companies that recommend that you not contact 

a credit reporting company directly.

 companies that suggest that you try to invent 

a “new” credit identity — and then, a new 

credit report — by applying for an Employer 

Identification Number to use instead of your 

Social Security number.

 companies that advise you to dispute all 

information in your credit report or take any 

action that seems illegal, like creating a new 

credit identity. If you follow illegal advice 

and commit fraud, you may be subject to 

prosecution.

December 2005

FTC Facts

For Consumers Federal Trade Commission

For The Consumer

www.ftc.gov 1-877-ftc-help
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. It’s a 

federal crime to lie 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 services they have promised.

The Truth

No one can legally remove accurate and timely 

negative information from a credit report. The law 

allows you to ask for an investigation 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 (FCRA):

 You’re entitled to a free report if a company 

takes adverse action against you, like denying 

your application for credit, insurance, or 

employment, and you ask for your report 

within 60 days of receiving notice of the action. 

The notice will give you the name, address, 

and phone number of the consumer reporting 

company. You’re also entitled to one free report 

a year if you’re unemployed and plan to look 

for a job within 60 days; if you’re on welfare; 

or if your report is inaccurate because of fraud, 

including identity theft. 

 Each of the nationwide consumer reporting 

companies — Equifax, Experian, and 

TransUnion — is required to provide you with a 

free copy of your credit report, at your request, 

once every 12 months. 

 The three companies have set up a central 

website, a toll-free telephone number, and a 

mailing address through which you can order 

your free annual report. To order, click on 

annualcreditreport.com, call 1-877-322-8228, 

or complete the Annual Credit Report Request 

Form and mail it to: Annual Credit Report 

Request Service, P.O. Box 

105281, Atlanta, GA 30348-

5281. You can print the form 

from ftc.gov/credit. Do not 

contact the three nationwide 

consumer reporting companies 

individually. They are providing 

free annual credit reports only through 

annualcreditreport.com, 1-877-322-8228, and 

Annual Credit Report Request Service, P.O. 

Box 105281, Atlanta, GA 30348-5281. You 

may order your reports from each of the three 

nationwide consumer reporting companies at the 

same time, or you can order your report from 

each of the companies one at a time. For more 

information, see Your Access to Free Credit Reports

at ftc.gov/credit.

 Otherwise, a consumer reporting company may 

charge you up to $9.50 for another copy of your 

report within a 12-month period.

 You can dispute mistakes or outdated items 

for free. Under the FCRA, both the consumer 

reporting company and the information provider 

(that is, the person, company, or organization 

that provides information about you to a 

consumer reporting company) are responsible 

for correcting inaccurate or incomplete 

information in your report. To take advantage 

of all your rights under this law, contact 

the consumer reporting company and the 

information provider.

You can dispute mistakes 

or outdated items in your 

credit report for free.

FTC Facts For Consumers 2
STEP ONE

Tell the consumer reporting company, in writing, 

what information you think is inaccurate. Include 

copies (NOT originals) of documents that support 

your position. In addition to providing your 

complete name and address, your letter should 

clearly identify each item in your report you dispute, 

state the facts and explain why you dispute the 

information, and request that it be removed or 

corrected. You may want to enclose a copy of your 

report with the items in question circled. Your 

letter may look something like the one on page 6. 

Send your letter by certified mail, “return receipt 

requested,” so you can document what the consumer 

reporting company received. Keep copies of your 

dispute letter and enclosures.

Consumer reporting companies must investigate 

the items in question — usually within 30 days — 

unless they consider your dispute frivolous. They also 

must forward all the relevant data you provide about 

the inaccuracy to the organization that provided 

the information. After the information provider 

receives notice of a dispute from the consumer 

reporting company, it must investigate, review 

the relevant information, and report the results 

back to the consumer reporting company. If the 

information provider finds the disputed information 

is inaccurate, it must notify all three nationwide 

consumer reporting companies so they can correct 

the information in your file.

When the investigation is complete, the 

consumer reporting company must give you the 

results in writing and a free copy of your report if 

the dispute results in a change. If an item is changed 

or deleted, the consumer reporting company cannot 

put the disputed information back in your file unless 

the information provider verifies that it is accurate 

and complete. The consumer reporting company 

also must send you written notice that includes 

the name, address, and phone number of the 

information provider. 

If you request, the consumer reporting company 

must send notices of any correction to anyone who 

received your report in the past six months. You can 

have a corrected copy of your report sent to anyone 

who received a copy during the past two years for 

employment purposes. 

If an investigation doesn’t resolve your dispute 

with the consumer reporting company, you can 

ask that a statement of the dispute be included in 

your file and in future reports. You also can ask 

the consumer reporting company to provide your 

statement to anyone who received a copy of your 

report in the recent past. You can expect to pay a fee 

for this service.

STEP TWO

Tell the creditor or other information provider, in 

writing, that you dispute an item. Be sure to include 

copies (NOT originals) of documents that support 

your position. Many providers specify an address 

for disputes. If the provider reports the item to a 

consumer reporting company, it must include a 

notice of your dispute. And if you are correct – that 

is, if the information is found to be inaccurate – the 

information provider may not report it again. 

For more information, see How to Dispute Credit 

Report Errors at ftc.gov/credit.

Reporting Accurate 

Negative Information

When negative information in your report is 

accurate, only the passage of time can assure its 

removal. A consumer reporting company can 

report most accurate negative information for seven 

years and bankruptcy information for 10 years. 

Information about an unpaid judgment against you 

can be reported for seven years or until the statute of 

FTC Facts For Consumers 3
limitations runs out, whichever is longer. There is no 

time limit on reporting: information about criminal 

convictions; information reported in response to 

your application for a job that pays more than 

$75,000 a year; and information reported because 

you’ve applied for more than $150,000 worth of 

credit or life insurance. There is a standard method 

for calculating the seven-year reporting period. 

Generally, the period runs from the date that the 

event took place.

For more information, see Building a Better 

Credit Report at ftc.gov/credit.

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 you sign anything. 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

 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

 the company’s name and business address

Have You Been Victimized?

Many states have laws regulating credit repair 

companies. State law enforcement officials may be 

helpful if you’ve lost money to credit repair scams.

If you’ve had a problem with a credit repair 

company, don’t be embarrassed to report it. While 

you may fear that contacting the government will 

only make your problems worse, remember that 

laws are in place to protect you. 

Contact your local consumer 

affairs office or your state Attorney 

General (AGs). Many AGs have 

toll-free consumer hotlines. Check 

the Blue Pages of your telephone 

directory for the phone number 

or check www.naag.org for a list 

of state Attorneys General.

Need Help? Don’t Despair

Just because you have a poor credit report doesn’t 

mean you won’t be able to get credit. Creditors set 

their own credit-granting standards and not all of 

them look at your credit history the same way. Some 

may look only at more recent years to evaluate you 

for credit, and they may grant credit if your billpaying history has improved. It may be worthwhile 

to contact creditors informally to discuss their credit 

standards.

If you’re not disciplined enough to create 

a workable budget and stick to it, work out a 

repayment plan with your creditors, or keep track 

of mounting bills, consider contacting a credit 

counseling organization. Many credit counseling 

Just because you have 

a poor credit report 

doesn’t mean you won’t 

be able to get credit.

FTC Facts For Consumers 4
organizations are nonprofit and work with you 

to solve your financial problems. But not all are 

reputable. For example, just because an organization 

says it’s “nonprofit,” there’s no guarantee that its 

services are free, affordable, or even legitimate. In 

fact, some credit counseling organizations charge 

high fees, or hide their fees by pressuring consumers 

to make “voluntary” contributions that only cause 

more debt.

Most credit counselors offer services through 

local offices, the Internet, or on the telephone. If 

possible, find an organization that offers in-person 

counseling. Many universities, military bases, 

credit unions, housing authorities, and branches 

of the U.S. Cooperative Extension Service operate 

nonprofit credit counseling programs. Your financial 

institution, local consumer protection agency, and 

friends and family also may be good sources of 

information and referrals.

If you are considering filing for bankruptcy, 

you should know about one major change to the 

bankruptcy laws: As of October 17, 2005, you must 

get credit counseling from a government-approved 

organization within six months before you file for 

bankruptcy relief. You can find a state-by-state list of 

government-approved organizations at 

www.usdoj.gov/ust. That is the website of the U.S. 

Trustee Program, the organization within the U.S. 

Department of Justice that supervises bankruptcy 

cases and trustees.

Reputable credit counseling organizations can 

advise you on managing your money and debts, help 

you develop a budget, and offer free educational 

materials and workshops. Their counselors are 

certified and trained in the areas of consumer credit, 

money and debt management, and budgeting. 

Counselors discuss your entire financial situation 

with you, and help you develop a personalized plan 

to solve your money problems. An initial counseling 

session typically lasts an hour, with an offer of 

follow-up sessions. 

For more information, see Knee Deep in Debt

and Fiscal Fitness: Choosing a Credit Counselor at 

ftc.gov/credit. 

Do-It-Yourself Check-Up 

Even if you don’t have a poor credit history, some 

financial advisors and consumer advocates suggest 

you review your credit report periodically

 because the information it contains affects 

whether you can get a loan or insurance — and 

how much you will have to pay for it. 

 to make sure the information is accurate, 

complete, and up-to-date before you apply for a 

loan for a major purchase like a house or car, buy 

insurance, or apply for a job. 

 to help guard against identity theft. That’s when 

someone uses your personal information — like 

your name, your Social Security number, or your 

credit card number — to commit fraud. Identity 

thieves may use your information to open a new 

credit card account in your name. Then, when 

they don’t pay the bills, the delinquent account 

is reported on your credit report. Inaccurate 

information like that could affect your ability to 

get credit, insurance, or even a job.

The FTC works for the consumer to prevent 

fraudulent, deceptive, and unfair business practices 

in the marketplace and to provide information to 

help consumers spot, stop, and avoid them. To file 

a complaint or to get free information on consumer 

issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP 

(1-877-382-4357); TTY: 1-866-653-4261. The 

FTC enters Internet, telemarketing, identity theft, 

and other fraud-related complaints into Consumer 

Sentinel, a secure, online database available to 

hundreds of civil and criminal law enforcement 

agencies in the U.S. and abroad.

FTC Facts For Consumers 5
Sample Dispute Letter

Date

Your Name

Your Address

Your City, State, Zip Code

Complaint Department

Name of Company

Address

City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are 

encircled on the attached copy of the report I received. 

This item (identify item(s) disputed by name of source, such as creditors or tax court, and 

identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) 

because (describe what is inaccurate or incomplete and why). I am requesting that the item 

be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed 

documentation, such as payment records, court documents) supporting my position. Please 

investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as 

possible.

Sincerely,

Your name

Enclosures: (List what you are enclosing)

For The Consumer Federal Trade Commission

www.ftc.gov 1-877-ftc-help

Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

FTC Facts For Consumers 6