Sometimes you need the help of an outsider. You can't be an expert at everything, so you might use the services of a credit-improvement expert. The right credit-counseling agency can truly help you improve your situation. However, the world of credit counseling and credit repair is full of scam artists.

A Helping Hand

Not every organization that claims to help you improve your credit is a bad one. There are organizations that actually want to help you, and they will charge a fair and reasonable rate. In fact, you might not pay anything out of pocket — the agency gets paid by your creditors. One of the most respected organizations that offers counseling services is Consumer Credit Counseling Services (on the Web at www.moneymanagement.org). This is a nonprofit organization with a history of helping people.

Unfortunately, Consumer Credit Counseling Services's reputation is a little too good. The world is full of businesses with names that are suspiciously similar to CCCS's name. Those other businesses may not have your best interests at heart. In fact, many of these businesses pose as nonprofit organizations, but profit is their main motivation. In early 2006, the IRS revoked the tax-exempt status of many of these so-called nonprofits. After an audit of sixty such organizations, the IRS found that at least thirty were bogus.

File Bankruptcy Today!

A lot of so-called credit-repair agencies are just bankruptcy attorneys in disguise. There is nothing wrong with bankruptcy attorneys, as long as they identify themselves as such. Unfortunately, many of these attorneys get folks in the door with false advertising. They claim that “credit problems are no problem,” or that they can “wipe out your debts.” Not surprisingly, their expert opinion is often that you should just file for bankruptcy.

A New Identity

Some credit-repair companies tempt you with the promise of a clean slate. Imagine starting over, shaking off the chains of your past credit problems. Some organizations suggest that you can do this by creating a new identity. You apply for an Employer Identification Number (EIN) from the IRS, and use that in lieu of your Social Security Number. Because the EIN is a brand new number, your credit history is not attached to it. Of course, this is illegal, and breaking the law won't make your life any easier.

Twist Your Lender's Arm

Some credit-repair agencies should actually be called credit-damage agencies. They suggest that you play hardball with your lenders. These agencies suggest that, by failing to pay your bills (on purpose), you signal that you are out of money. You should do this even if you have the money to pay your bills. As a result, your creditors assume that you are on the brink of bankruptcy. This makes it easier for you to offer them less than you owe. They are more likely to accept the offer, figuring that something is better than nothing. Unfortunately, these tactics are more likely to damage your credit than to help you out.

Do-It-Yourself

Instead of taking your chances, you might be better off doing it yourself. The techniques you learn from this book will help you make progress toward better credit. If things get too complicated or too difficult, you can always go for help.