Don't Use a Credit Repair Clinic Louisiana

If you want to clean up your credit file, steer clear of credit repair clinics. These companies claim they can fix your credit, qualify you for a loan, or get you a credit card. But you shouldn't have to pay for these services: These companies can legally do only what you can easily do yourself. And some of them use questionable tactics that can land you in hot water.

Some Credit Repair Clinics Use Illegal Tactics

Some credit repair clinics use practices that are fraudulent, deceptive, and even illegal. For example, credit repair clinics have been caught:

• stealing the credit files or Social Security numbers of people who are under 18 or have died, and substituting these for the files of people with poor credit histories, and
• advising clients to create a new identity by applying for an IRS Employer Identification number (EIN), a nine-digit number that resembles a Social Security number, and using it instead of their Social Security number to apply for credit -- which is illegal.

You Can Repair Your Credit For Free

What Credit Repair Companies Claim to Do

Here's what credit repair companies claim they can do -- and how to do it yourself:

Remove incorrect information from your credit file. You can do that yourself under the Fair Credit Reporting Act.

Remove correct, but negative, information from your credit file. Negative items in your credit file can legally stay there for seven years or more (depending on the type of information), as long as they are correct. No one can wave a wand and make them go away.

One credit repair clinic tactic is to challenge every item in a credit file -- negative, positive, or neutral -- with the hope of overwhelming the credit bureau into removing information without verifying it. However, credit bureaus often dismiss these challenges on the ground that they are frivolous, a right that credit bureaus have under the Fair Credit Reporting Act. You are better off getting your file and selectively challenging the items that are incomplete or inaccurate.

Even if the credit bureau removes information that a credit bureau had the right to include in your file, it's no doubt only a temporary removal. Most correct information reappears after 30-60 days, because the creditor that first reported the information to the credit bureaus will report it again.

Get outstanding debt balances and court judgments removed from your credit file. Credit repair clinics often advise debtors to pay outstanding debts if the creditor agrees to remove the negative information from your credit file. This is certainly a negotiation tactic you want to consider, but you don't need to pay a credit repair clinic for this advice.

Advise you to get a major credit card. Credit repair clinics can give you a list of banks that offer secured credit cards -- credit cards used against a balance you deposit in a bank account. (This is the first step to getting a major credit card if you have bad credit.) While this information is helpful in rebuilding credit, it's not worth paying for -- you can find this information yourself for little or nothing.

For-Profit vs. Nonprofit Credit Repair Companies

Many states and the federal government regulate for-profit credit repair clinics, or even prohibit them from doing business. Some dubious credit repair clinics have tried to get around these regulations by setting themselves up as nonprofits.

Before using any organization that claims to be a nonprofit, carefully check the company's fees, claims about its services, and reputation. Call the Better Business Bureau or ask for the names of satisfied customers.

For comprehensive information on how to repair your credit, including dozens of forms and letters on CD-ROM that will help you repair your credit as easily as possible, get Credit Repair (Nolo).