Can a "one-of-a-kind" computer disk clear away the blemishes on your credit report, even the legitimate ones? That's what the National Credit Education and Review and ICR Services, Inc. -- two related Michigan companies -- claimed. However, the Federal Trade Commission charged them with fraud, and earlier this month, the defendants settled for $1.15 million.

According to the FTC, more than 183,000 customers paid the defendants more than $53 million for their credit-repair services since 1996.

First, a few words about these "companies." ICR Services is not a credit counseling company, but, rather, a "premiere marketing company" as stated by the recorded operator you hear if you call headquarters. In other words, this is a "multi-level marketing" operation -- think Amway. Yes, some of these systems are respectable (for example, every parent should check out Usborne Books), but many focus on acquiring new representatives first, serving customers second.

As for National Credit Education and Review, it calls itself a "501 (c)(3) charitable educational organization," complete with a dot-org website address. It offers two 36-hour courses on improving your credit. But don't be deceived -- just because a company is a dot-org doesn't mean that it can't rake in millions of dollars and handsomely enrich its employees and owners.

According to its press release, the FTC alleged that the defendants "told consumers that the defendants were able to remove negative items such as bankruptcies, foreclosures, and late-payments from credit reports even if the items were accurate, verifiable, and not obsolete." They claimed they had a unique computer disk, valued by an independent appraiser at $200 million and once insured by Lloyd's of London for $15 million, that could identify inaccuracies in the credit reporting process. In reality, however, no such disk existed -- the "National Credit Repair" service just challenges every negative item on a report by sending letters to the credit reporting agencies.

By settling, the defendants do the old "We're not saying we're innocent, we're not saying we're guilty -- but here's a bunch of money to get off our backs." In other words, they're allowed to stay in business, just not talk about the disk. However, PowerPoint presentations on the ICR website still offer lofty "examples" of negative items being deleted from credit reports within 90 days and creditors knocking 40% off the debt. What it doesn't say is that such leniency from lenders comes at a price, and that you may have to perturb other lenders by stopping payments on current loans for a few months. This can send your credit score through the floor.

Here's the bottom line: You don't need someone else to get out of debt and improve your credit. It can be complicated, which is why we created a Credit Center, but you don't have to hire someone to write letters and renegotiate your debts. Start by visiting our Get Out of Debt area, which features a free How-To Guide.