5 Do's and 4 Don'ts to Repair Your Credit

Credit report with score

By Jim Gold

It pays to repair a broken credit report, but avoid scams that could cost you thousands.

Removing negative items from your credit report can help improve your FICO score, making it easier to buy or rent a home, get insurance, buy a car — and sometimes even make the difference in getting a job. A higher credit score can mean lower interest rates when you go to acquire a mortgage or car loan.

For example, say you put 20 percent down on a $300,000 home. According to online mortgage calculators, like one we tested at Zillow, over the 30-year life of your $240,000 loan, at a 3.5 percent interest rate you'd spend $147,974 in interest; at 6 percent, you'd spend $278,013 in interest.

From our Solutions Center: Free help with your credit score

That's why so many people try to repair their credit. Many turn to professionals for help, but experts, including Money Talks News' Stacy Johnson, will tell you to be careful as there are many scammers out there.

The Federal Trade Commission, for example, recently asked the courts to help shut down one allegedly bogus firm that traded on the consumer protection agency's name. The Los Angeles-area company called itself FTC Credit Solutions, but the initials really stood for First Time Credit Solution, the agency said.

The firm's actions, it alleged, were typical of scammers illegally charging customers upfront fees, falsely promising they could remove negative information such as late payments, foreclosures and bankruptcies from consumers' credit reports and guaranteeing consumers a credit score of 700 or above within six months or less.

While experts say there is nothing a credit repair company can do for you that you can't do for yourself, many consumers still turn to professionals. Prices on allegedly legitimate firms run $59 to $89 a month, according to some reports, and some charge an initiation fee.

We've partnered with Debt.com, accessible through our Solutions Center, to match you with reputable, trustworthy experts who can help guide you through the process of repairing your credit.

Meantime, follow these four don'ts and five do's of credit repair.


These gimmicks, experts say, indicate you may be dealing with a scammer:

  1. New number trick: Some credit repair agencies advise you to start a new credit file by getting a new tax ID number — CPN, credit profile number, or EIN, an IRS-issued Employer Identification Number — to use in lieu of your Social Security number. The new number may resemble a Social Security number. This trick is illegal. The FTC warns that scammers may be selling stolen Social Security numbers, often taken from children. By using a stolen number as your own, the con artists involve you in identity theft.

  2. Lying trick: Scammers may tell you to give false information on your applications. The FTC reminds consumers it's a federal crime to lie on a credit or loan application, misrepresent your Social Security number, or obtain an EIN from the IRS under false pretenses. You could go to prison instead of to the head of the credit repair class.

  3. Protest trick: Credit bureaus remove from your credit history the items that you protest — at least while they investigate. While those things are off your credit report, some people will apply for new credit. That's fraud.

  4. Upfront charges trick: The law requires credit repairs companies not to collect a dime from you before they perform any services.


  1. Get free copies of your credit reports: Visit AnnualCreditReport.com to get a free copy of your credit report from each of the three credit reporting agencies, then thoroughly scrutinize the information in the reports for errors, omissions and fraudulent accounts. Be on the lookout for negative marks that should have dropped off your report because they're more than seven to 10 years old. Most bad items drop off in seven years.

  2. Fix errors: Notify the credit reporting agency online or by letter (see a sample by the FTC here). It will contact the other credit reporting agencies. A letter should include your name and address, the items in dispute, your argument and any supporting facts to support your claim, a formal request to resolve the issue. Send copies (not originals) of documentation that supports your claim the information is wrong. The credit reporting agency will have 30 days to investigate and communicate its decision.

  3. Request a goodwill adjustment: If your credit reports contain contents that are accurate but negative, write to your creditors and ask they remove the bad information right away. Be polite; they aren't required to comply with your request. However, Johnson notes, they may be more willing if you still have a business relationship with them.

  4. Know your rights: The Credit Repair Organizations Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you or to charge you before they've performed their services. This law, enforced by the FTC, requires credit repair companies to explain:

  • Your legal rights in a written contract that also details the services they'll perform.

  • Your three-day right to cancel without any charge.

  • How long it will take to get results.

  • The total cost you will pay.

  • Any guarantees.

5. Exercise your recourse: If a credit repair company you hired doesn't live up to its promises, the FTC says you have these options:

  • Sue them in federal court for your actual losses or for what you paid them, whichever is more.

  • Seek punitive damages — money to punish the company for violating the law.

  • Join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney's fees.

For more on the do-it-yourself route, see our earlier story here.

Have you tried to repair your own credit or used a professional? How'd it go? Share with us in comments below or on our Facebook page.

Originally published