Protect Your Credit : Fixing it yourself might be the best way to go.

Take a look in your daily newspapers, television, and Internet. Every organization offering credit services seems to claim:

• "Credit problems? No problem!"
• "We can erase your bad credit - 100% guaranteed."
• "Create a new credit identity - legally."
• "We can remove bankruptcies, judgements, liens and bad loans from your credit file forever!"

If you want to save some money at the same time you fix your credit problems, do yourself a favor and don't listen to these scammers. You can achieve improvement of your credit status only through time, a conscious effort and a personal debt repayment plan.

Read on and you will learn how to protect your credit and increase your credit worthiness with low or no-cost to you.

The Scam

Many companies nationwide promise, with a fee, to clean up your credit so you can take out mortgage loans, get good deals for your auto loans, etc. The truth of the matter is, these companies will not be able to deliver what they promise. The most common outcome of this type of scam is they take hundreds of dollars of your money and vanish without a trace, obviously after doing nothing to help you with your credit problems.

The Warning Signs

It is easy to spot scammers. Just look for these tell-tale signs:

• companies that want you to pay for services before any service is actually performed.
• companies that don't tell you your legal rights and what you can do yourself for free.
• companies that recommend you not to contact credit reporting companies 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 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.

If you apply for credit and provide false information over the phone or mail, you could be charged and prosecuted for mail or wire fraud. 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 is considered a federal crime.

Make sure to remember that under the Credit Repair Organizations Act, companies are not allowed to collect any fees from you unless they have completed the services they promised to perform.

The Truth

It is impossible for any one to legally remove accurate and timely negative information from a credit report. If the information is inaccurate or incomplete, the law permits you to ask for an investigation to correct the misinformation. This self-service will cost nothing to you. Everything that a credit clinic can do for you legally, you can do for yourself at little or no cost. The Fair Credit Reporting Act (FCRA) stipulates:

Step One

If you think the information on your credit report is inaccurate, tell the consumer reporting company, in writing. To support your position, include copies (NOT originals) of disputed documents. After providing your complete name and address, make sure your letter clearly identifies each item in your report you are disputing, state the facts and explain why you dispute the information and request that it be removed or corrected. It is a good idea to enclose a copy of your report with the items in question circled. Send your letter by certified mail, "return receipt requested" so you can document what the consumer reporting company received. Make sure to keep copies of your dispute letter and enclosures.

Unless the consumer reporting companies consider your dispute frivolous, they are obligated to investigate the items in question - usually within 30 days. They also must forward all relevant data you provided as inaccurate or incomplete to the organization that provided the information. Once 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 to be inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

If the dispute results in a change in your credit report, the consumer reporting company must give you the results in writing and a free copy of your credit report. Once the disputed items are changed or deleted, the consumer reporting company cannot put them back in your file unless the information provider verifies that they are accurate and complete. The name, address and phone number of the information provider must be sent to you in a form of written notice by the consumer reporting company.

In addition, you can request the consumer reporting company to send notices of any correction to anyone who received your report in the past six months. For employment purposes, you can have a corrected copy of your report sent to anyone who received a copy during the past two years.

With paying a small fee, you can ask the consumer reporting company to provide your statement of dispute to anyone who received a copy of your report in the recent past.

Step Two

Let 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. If the information is found to be inaccurate, then the information provider should not report it again.

Reporting Accurate Negative Information

Only the passage of time can assure the removal of accurate negative information in your credit report. 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.

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.

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.

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: