You can take steps to repair credit



Tough economic times might push even more desperate consumers into the hands of unscrupulous credit repair firms.

That worries Maryland regulators, who are stepping up oversight of credit repair groups.

"We have to stay ahead of the problems," says Sarah Bloom Raskin, Maryland's commissioner of financial regulation. Her office has launched a campaign dubbed "Operation Repair," which includes making sure individuals and companies offering credit repair to Marylanders are licensed as required.

Disreputable companies promise to scrub bankruptcies and bad loans from credit reports. Negative information that's correct can't be erased.

Shady credit repair groups also falsely claim they can legally create a new identity for you. And they often charge hundreds or thousands of dollars for promises they can't keep.

Credit records can be repaired with time and effort. But you don't need a credit repair firm. You can do it on your own for little or no money.

Credit repair schemes are a widespread problem.

The Federal Trade Commission and 22 states recently filed complaints against 33 credit repair operations for falsely claiming they could wipe out negative information - even if it's accurate - from credit reports.

Maryland wasn't involved in this latest FTC sweep. Raskin says her office isn't getting a rash of complaints about credit repair. But the matter comes up during foreclosure complaints, when struggling consumers mention they paid $1,500 for somebody to fix their credit score without success, she says.

Raskin's agency released an advisory last week telling consumers of their rights when dealing with credit repair firms.

Under state law, as well as federal, a credit repair firm must give you a written contract that outlines the services it will perform. You can cancel the contract for any reason within three business days of signing it. And a credit repair firm can be paid only after completing the job promised.

To find out if a group is licensed in Maryland, call 410-230-6155.

The National Association of Credit Services Organizations formed last year to set standards for the industry, says Dominic Campasano, president of the trade group. He says there are problem players but adds that there also are legitimate ones that can help remove inaccurate information on reports.

Consumers can do it themselves, he adds. "But do they want to spend the time to do it, or do they want to have someone else handle it?"

Steve Baker, director of the FTC's Midwest region, which oversees credit repair, doubts the existence of legitimate players.

"We haven't seen them if they are out there," he says.

So why take the risk? Save yourself hundreds of dollars instead and do the work yourself.

Start by getting your credit report from each of the three major credit bureaus. You are entitled to a free report annually from each of the three. Order reports online at or by calling 877-322-8228. (Marylanders can get a free report annually under state law, too.)

Look for any errors in the reports. "Twenty-five percent of credit reports have errors," says Steve Bucci, author of Credit Repair Kit for Dummies.

Dispute any incorrect or out-of-date information on the reports, and send along copies of documents to support your claim. Negative information that's accurate must be removed after seven years; a Chapter 7 bankruptcy will remain on a report for 10 years.

Credit bureaus generally have up to 30 days to investigate. The disputed information will come off your report if the creditor hasn't verified it within that time, Bucci says. The information may be added again if the creditor verifies it later, he adds.

You might have a better chance of clearing up an error by dealing directly with the creditor, Bucci adds.

If these steps don't work, you might need to hire an attorney to write a letter to the creditor on your behalf, Bucci says. It's far less expensive than a credit repair firm and gets results quicker, he says.

You also can add a 100-word statement on a credit report to tell your side of the story about a disputed item. This statement can help when an individual, such as an employer or landlord, is reviewing your credit report, Bucci says. Your explanation might be enough to answer any questions they may have.

To see how you look to creditors, check out your FICO credit score, available for purchase at A year ago, you had little trouble getting credit if your score was at least 680, Bucci says. Now it takes a score of 720 or higher, he says.

Paying bills on time and reducing card debt are ways to improve your score over time.

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