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Credit Repair Secrets

There are 28,000 ways to fix your credit.

At least, that's how many hits I got when I Googled the phrase "credit repair secrets." Most of these, as far as I could tell, offered e-books or services promising quick solutions to bad credit problems. Many hinted at "secrets" that the credit bureaus "don't want you to know." As if Experian and Equifax (NYSE: EFX  ) actually delight in lousy credit ratings! (They don't care either way, as far as I know -- they just try to be accurate.) Many of the services seemed like the kind that Fool Dayana Yochim wrote about a couple of years back -- high-fee, aggressively sold "debt consolidation" services that might or might not end up helping your credit rating.

One in particular stood out, though. This outfit (I'm not going to name it) offered guaranteed increases in your FICO score for an up-front fee -- 50 points for $499, 100 points for $999 -- with an ongoing maintenance fee of $10 a month. I'm guessing that this company gets its clients' names added to the credit cards of people with really good credit, paying the cardholders a fee for the service. Yes, people really do that.

The quick fix
Because of a loophole in the way FICO scores are calculated, adding a couple of these pristine accounts to a lousy rating can bump it up significantly -- enough to save thousands on a mortgage, for instance. Fair Isaac (NYSE: FIC  ) , the developer of the FICO methodology, plans to make changes later this year that will foil these scams. Meanwhile, they go on. They're even technically legal, for now.

The scariest part of that company's ad? Right below the pricing, this phrase: "Financing available to homeowners!" Let's see. We've got someone who has screwed up their credit rating really badly, and whose finances are probably an absolute disaster. We're going to ask them to put up their house as collateral on a loan to cover the thousand-dollar fee we're demanding to help them out. And we're going to "help them out" not by showing them how to get their affairs in order, but with a legally dubious trick.

Folks, there are names for people like that, but I don't think my editor will let me use 'em here.

Real credit repair secrets
Let's go back to the beginning for a moment: 28,000 hits. Credit "repair" services and books and "secrets" that promise an easy fix are so popular because the right way to fix lousy credit -- the only way that really works -- is hard. It involves facing up to the habits that caused the trouble in the first place, and dealing with the consequences of those habits. It's hard because it involves making plans to pay down debt and sticking to those plans. It's hard because it means living with less -- giving up big credit card spending, and diverting some of your paycheck toward paying off your bills.

The good news: Once you get past those mental adjustments, the rest is pretty easy, especially with the Fool's help. Check out our Credit Center for a comprehensive walk through everything you need to know, or get the crash course with the Fool's quick-and-dirty Get Out Of Debt Seminar. Got questions? Take 'em to our friendly and helpful Foolish discussion boards for great advice from folks who know what's what.

And for the advanced class, consider trying out our Motley Fool Green Light newsletter service. Each month's issue offers great personal finance advice, together with excellent tips that can save you hundreds of dollars. Be our guest free for 30 days -- there's no obligation to buy, and we'll never, ever ask you to pledge your home as collateral.

Fool contributor John Rosevear invites you to send him your comments, questions, and ideas. He does not own stock in any of the companies mentioned. The Motley Fool's disclosure policy is the real deal.


Read/Post Comments (5) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 06, 2009, at 6:08 AM, LarryHH wrote:

    For those who have been working hard to repair credit because of the current mortgage crisis, you are going to be thrilled over this one. While some markets shuddered at home values dropping by as much as 40 percent, others are rising significantly. Lower prices in the West are pushing home sales up. Home sales went up 13 percent and home prices dropped 26 percent. United States overall home sales are still down about 11 percent compared to last year. This information presents a comforting sentiment as we have suffered a great deal from the worst recession since the Depression. While the economy is slowly making a comeback, people are still in desperate need of credit repair. It’s going to take a lot of hard work and endurance to properly get things back in perspective.

    Check out this article to read more about the real estate market and how to <strong><a title="READ Despite widespread need to repair credit, home sales rise in West" rev="vote-for" href="http://personalmoneystore.com/moneyblog/2008/12/26/despite-w... credit</a><strong>.

  • Report this Comment On April 29, 2009, at 10:35 PM, realcreditrx wrote:

    I agree, real credit repair is not easy. Just like MLM schemes, if it sounds too good to be true... it probably is. The only true way to boost your credit score is to stay persistant, but it can be done.

    There is a blog that tells your rights under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act at www.myrealcreditrx.blogspot.com and some articles on stopping harassment.

    Rome wasn't built in a day and good credit reports aren't either, but discipline yourself and stick with it and ANY credit report is fixable. You can also check out www.realcreditrepairprogram.com.

    Just stay away from "Credit Repair" Companies and "Debt Settlement" Companies, there is nothing that they can do that you cannot do on your own. They usually make your situation worse and make thousands off of your situation. The only expert you need is YOU! Good luck.

  • Report this Comment On November 10, 2009, at 6:08 AM, asfwaseem wrote:

    I repaired my Own Credit by Following these Secret Credit Repair Guidelines.if u need to solve it so log o n here an d forget your tension

    http://www.efixurcredit.com

  • Report this Comment On July 16, 2011, at 3:40 PM, kycreditexpert wrote:

    While I certainly agree that the best approach to a better credit score is by paying your debts on time & also being living within your means... life causes financial hiccups that are sometimes unavoidable.

    Too often, I read articles that forget about people with catestrophic medical debt, unforeseen auto accidents, etc.

    While I'm sure that most bad credit begins with bad habits, the Fair Credit Reporting Act plus the Fair and Accurate Credit Transactions Act allow citizens to dispute items that are NOT being reported accurately, completely or are verifiable.

    Additionally, bad credit isn't always the debtors fault. Often, the credit reporting agencies, creditors or identity thieves are to blame.

    So, before you completely pass judgement... <http://kycreditexpert.com/ target="_blank">credit repair experts</a> are often times the consumers best option to begin reclaiming their credit file... as long as the <http://twitter.com/kycreditexpert>credit restoration expert</a> is following the letter of the laws, not over promising, and also offering excellent budgeting and credit educational services to help them avoid bad credit in the future.

  • Report this Comment On February 25, 2012, at 2:59 PM, DebtRemovalDocs wrote:

    DebtRemovalDocs from Modern Data Solutions Corp offers real credit repair, debt removal and even help for those who are already in court. This is not about just sending a bunch of letters. Telling a debt collector that you dispute the debt will only result in them sending you a volume of copies of the statements the credit card company sent you for the past 5 years.

    Learn the secrets to fix your credit situation on your own. We offer Pre-Written documents to help you sort through your credit and debt issues in just three months and get back on the financial stronghold.

    Screenshots available on website, as well as other valuable information.

    debtremovaldocs dot com

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John Rosevear
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John Rosevear is the senior auto specialist for Fool.com. John has been writing for the Fool since 2007. A lifelong car nerd, his current daily driver is a Cadillac CTS-V.

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