Credit Repair: Self-Help May Be Best

February 1998

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 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 can’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 do—yourself—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. It’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 you’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 bureau’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 correct—that is, if the 

information is inaccurate—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.

Reporting Negative Information 

Accurate negative information generally can be reported for seven years, but there are exceptions:
● Bankruptcy information can be reported for 10 years;

● Information reported because of an application for a job with a salary of more than $75,000 has 

no time limitation;

● Information reported because of an application for more than $150,000 worth of credit or life 

insurance has no time limitation;

● Information concerning a lawsuit or a judgment against you can be reported for seven years or 

until the statute of limitations runs out, whichever is longer; and

● Default information concerning U.S. Government insured or guaranteed student loans can be 

reported for seven years after certain guarantor actions.

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 company’s name and business address.

Have You Been Victimized? 

Many states have laws strictly regulating credit repair companies. States 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 them. While you 

may fear that contacting the government will only make your problems worse, that’s not true. Laws 

are in place to protect you. Contact your local consumer affairs office or your state attorney general 

(AG). Many AGs have toll-free consumer hotlines. Check with your local directory assistance.
You can file a complaint with the FTC by contacting the Consumer Response Center by phone: 202-

FTC-HELP (382-4357); TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade 

Commission, 600 Pennsylvania Ave, NW, Washington, DC 20580; or through the Internet, using the 

online complaint form. Although the Commission cannot resolve individual problems for consumers, 

it can act against a company if it sees a pattern of possible law violations. 

The FTC publishes free brochures on many consumer issues. For a complete list of publications, write 

for Best Sellers, Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave, 

NW, Washington, D.C. 20580; or call (202) FTC-HELP (382-4357), TDD (202) 326-2502. 

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 can’t resolve your credit problems yourself or you need additional help, you may want to 

contact a credit counseling service. There are non-profit organizations in every state that counsel 

consumers in debt. Counselors try to arrange repayment plans that are acceptable to you and your 

creditors. They also can help you set up a realistic budget. These counseling services are offered at 

little or no cost to consumers. You can find the office nearest you by checking the white pages of your 

telephone directory.

In addition, nonprofit counseling programs sometimes are operated by universities, military bases, 

credit unions, and housing authorities. They’re also likely to charge little or nothing for their services. 

Or, you can check with your local bank or consumer protection office to see if it has a list of reputable, 

low-cost financial counseling services.

Do-It-Yourself Check-Up 

Even if you don’t have a poor credit history, it’s a good idea to conduct your own credit check-up, 

especially if you’re planning a major purchase, such as a home or car. Checking in advance on the 

accuracy of the information in your credit report could speed the credit-granting process.

You’re entitled to one free report a year if you can prove that:

1. you’re unemployed and plan to look for a job with 60 days;

2. you’re on welfare; or

3. your report is inaccurate because of fraud. 

Otherwise, a credit bureau may charge you up to $8 for a copy of your report.
Credit bureaus usually are listed in the yellow pages of your telephone book under "credit reporting 

agencies." Three large national credit bureaus supply most credit reports: TRW, Equifax, and Trans 

Union. You may want to contact each of them for a copy of your report.

Experian (formerly TRW) 

P.O. Box 949 

Allen, TX 75013 

(888) EXPERIAN (397-3742)

Equifax 

P.O. Box 740241 

Atlanta, GA 30374-0241 

(800) 685-1111

Trans Union 

760 West Sproul Road 

P.O. Box 390 

Springfield, PA 19064-0390 

(800) 916-8800