Avoid Scams When Cleaning Up Bad Credit

By Francine L. Huff
Mortgage Credit Problems Columnist

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You're finally serious about doing what's necessary to clean up your bad credit. But whether you choose to get a debt consolidation loan or are looking to work with a credit repair agency, here's what you need to know to protect yourself from scams.

Do It Yourself

Everywhere you look there are advertisers claiming that with their help you can fix your bad credit easily and at no cost. But in many of these cases you're better off saving your money and setting up your own plan for debt consolidation and repairing your credit. Simply put, many of these companies will do nothing more than take hundreds or thousands of your dollars and never deliver on repairing your credit history and paying down debt.

Be Skeptical

If a debt consolidation service or credit repair agency insists on being paid upfront to provide services, run the other way. Other signs of potential fraud are not explaining your legal rights and suggesting that you create a "new" credit identity. It's illegal to give incorrect information on a loan or credit application so steer clear of anyone who encourages you to do so.

Know the Law

Debt consolidation services and credit repair firms cannot remove accurate information from your credit report even if they promise to do so. They can, however, help you to dispute information that is incorrect on a credit report. But you don't need a middleman to do this for you. You can do it yourself for free. It's also one of your rights under the Fair Credit Reporting Act (FCRA). Watch out for debt consolidation loan or credit repair companies that try to get you to dispute all information in your credit report or do something that seems illegal.

Having bad credit can make you feel very vulnerable and helpless. But keep your emotions in check and use your common sense to find a workable plan for debt consolidation and to repair your credit.

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