Everyone wants a good credit rating. It is important when buying a home or a car. It allows you to get good interest rates and the best deals. It is the subject of many television, radio, print and internet ads. The wise consumer will not fall for these ads. They are a waste of time and money. It takes time to repair bad credit and conscientious repayment of debt. Bankruptcy is an option when you get in so deep that you can not get out. A new law requires that before a person can declare bankruptcy, he must have received credit counseling within the past six months, but the for-profit “credit counselors” are not the right choice. The Consumer Credit Counseling Service (CCCS) are non-profit counseling services and are members of the National Foundation for Credit Counseling. They provide free or low-cost confidential service nationwide. Use care when looking up the name on the internet. For profit counselors are sneaky, they may pull you into their site by changing a single word.

Get a Copy of Your Credit Report

Here is another gimmick companies are using to lure in people looking for bad credit repair solutions. Everyone is entitled to a free copy of their own personal credit report from any or all of the three major credit bureaus once a year. A new law has required that the credit bureaus make it easier for customers to access this information. They are allowed to advertise other services for which there may be a charge, but they are required to allow consumers to view their credit reports on line or print them out for a full 30 days from the initial request. The Federal Trade Commission suggests that you be careful to spell the web address correctly (www.annualcreditreport.com) or link to it from the FTC website (www.ftc.gov) to avoid being caught up in a maze of advertisements and costly services. Once you receive copies of your credit report, check for errors and report them. Ask that they be removed from your credit report. It does not take a lawyer to do this, but several law firms make a business out of it. Once you have done the best that you can with what is on your credit report, the next step is to begin to establish a good credit history. A secured credit card is one of the best ways to do this; the credit limit on the card is linked to a savings account. Statements are sent, bills are paid and payment record is reported to the major credit bureaus. After you use one of these for a while, many companies will offer a regular credit card, but be sure to compare offers.

Bad Credit Made Worse

Some companies advertise debt negotiation services. “Settle your debt for pennies on the dollar!” They can negotiate with credit card companies and sometimes the companies will accept a lower payment, but it will show up on your credit report as a charge off and will stay there for seven years. This will not repair your credit. These companies advertise that you will not be able to get credit for ten years after a bankruptcy, when in fact creditors have their own criteria for evaluating your financial situation and some may offer credit only a short time after a bankruptcy is filed. Just one more thing to avoid, there are companies that offer, for a fee, to help you create a “new credit identity”. They call what they are doing “file segregation” and claim it is legal. The FTC says it is not.