Can Credit Repair Companies Really Improve My Credit Report?

  — -- The answer is maybe -- but they can't do anything that you couldn't do yourself, for free.

Anything on your report that's bringing down your credit score is going to stay on, if it's accurate information.

So if a credit repair company promises to remove negative information such as a bankruptcy or judgment, and they want money up front to do it -- run.Credit experts say that only time, effort and a solid plan for repaying your debts will improve your credit-worthiness.

There are plenty of unsavory operators out there, so be careful. Many consumers have lost hundreds if not thousands of dollars to scammers who take their money and do nothing to improve their credit. Here are some warning signs, according to the Federal Trade Commission:

Under the federal Credit Repair Organizations Act, credit repair companies need to provide a detailed written contract about the services they'll perform, include a three-day right to cancel without charge, state how long it will take to see results, disclose the total cost to you and outline any guarantees. It's illegal for them to charge you up front.

Before you hire anyone, remember this: The sad truth is that accurate negative information stays on your report for seven years. Bankruptcies are reported for 10 years. Criminal info can stay on forever.

No credit repair company can get rid of that.

If there's incorrect information on your report, however, that's another story – and you can fix that yourself. All consumers are entitled to a free copy of their reports with the three major credit reporting bureaus (Experian, Equifax and TransUnion) every 12 months at www.annualcreditreport.com. And if you've been denied credit, insurance or employment due to a lousy credit report within the last 30 days, you also are entitled to a free copy of your report.

Look for mistakes or outdated items. You can dispute these for free through the credit reporting bureaus. Explain why you're disputing it, provide copies of documents and request an investigation. Tip: Include a copy of the credit report with the questionable items circled. Send it by certified mail, return receipt requested. The credit reporting bureau must investigate within 30 days. You also should contact the company that provided the inaccurate information so they can correct it.

If you win your dispute, the credit reporting bureau will have to correct your report. You may also request that they send the corrected version to anyone who received your report in the past six months (or two years for reports that went to prospective employers).

If you don't win, you can ask that your report includes a statement with your version of the dispute.

Whatever the state of your credit report, don't lose heart. Some creditors are willing to look at your more recent credit history, so as long as you keep showing improvement, a past problem might not set you back. If you're still struggling, consider using a non-profit credit counseling service to get back on track. If you go this route, ask your local consumer agency, financial institution, military base or other trusted source for a recommendation, or check out the National Foundation for Credit Counseling, www.nfcc.org, the country's largest non-profit credit counseling service, with 90 member agencies nationwide.

(Sources: Federal Trade Commission, Consumer Financial Protection Bureau, Illinois Attorney General, Experian)

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