But how can you tell who is genuine? The Credit Repair Organizations Act was passed to help you do just that. Avoid the scammers by knowing what to look out for.

1. Shop around for a company so that you get a feeling for the standards that they all have. As with all services, it is usually better not to respond to people who contact you cold, directly by telephone or letter. Even if you agree to meet them, do not be pressurized into signing anything until you have had a chance to shop around.

2. Avoid any company that tries to collect money from you up front. They should not require payment until they have performed some services for you.

3. Do not select a company that makes guarantees about the results that they will get for you - for example, if they promise you a credit score increase of 100 points. They can advertise the average results that they have gotten for other clients, but they cannot promise you a certain score because they do not control that. Until they see your report and know your circumstances, they cannot be sure that they can improve your credit score at all.

4. They must inform you that you have a right to repair your credit for yourself. You do not need to hire anybody unless you want to. If their written information does not tell you this, they may not be legitimate.

5. Do not enter a contract that you cannot cancel. You should be allowed to cancel at any time. You would have to pay for the work that they had done for you up to that point, but no more.

6. Avoid any company that offers file segregation. This is an illegal practice that involves creating a new credit identity for you.

If you are tempted to go for file segregation remember that if the credit repair company is caught, so are you. You would be breaking the law too. All it takes is for one unhappy client to report them and all of their files will be examined, resulting in trouble for their other clients ... including you.

People who file for bankruptcy almost always receive letters from companies promising to solve all of their credit problems in this way. They will say that it is legal but after your new credit file is set up, any time that you apply for credit you will have to lie on the application forms. Giving false information to obtain credit is fraud. You can be fined or even sent to jail.

There are plenty of legitimate companies out there that can help you with improving your credit score. Keep these points in mind and you will have no trouble avoiding the most common credit repair scams.

Copyright © 2008 by Chet Day