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Credit Repair: Self Help May Be Best
Published by the Federal Trade Comission

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 ScamEveryday, 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 SignsIf 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.

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 TruthNo 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.

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 TWOTell 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 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
bill-paying 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 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.
Sample Dispute Letter
Date
Your Name
Your Address
Your City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code