Top Five Credit Card Scams #5: Credit Repair Companies
Credit repair companies claim that they can erase your bad credit and repair your credit report, all for a small fee. They may even claim to remove bankruptcies, liens, and bad loans. But beware of these claims that sound too good to be true because most of them are. They take hundreds, perhaps thousands, of dollars from you and then make little to no improvement to your credit history.
Some warning signs of this type of scam include a company who charges you fees before they do anything for you. Legitimate credit repair companies will consolidate your payments and reduce your interest rates before they charge you anything. Also beware of any company that is not forthcoming about what you could be doing for yourself for free. They only want your money, not your peace of mind. Also watch out for companies that discourage you from contacting credit bureaus personally, that encourage you to dispute every entry on your credit report, and that advise you to create a false identity with an EIN instead of your Social Security number.
The truth is only time, consistent repayment of your debts, and new conscientious activity will repair your credit. For some reliable methods of repairing your credit yourself, see the FTC's article, Credit Repair: Self Help May Be Best.