Before you deal with any credit repair agency you need to be aware of what they can and cannot do.

For starters, reputable credit repair agencies can save you the time and hassle of scouring your credit report for errors that may be lowering your credit score. The best agencies will sit down with you and verify any accurate negative information before taking action.

Credit repair agencies can’t remove any negative information on your credit report that’s correct, regardless of any claims that may be made to the contrary. Agencies that knowingly dispute accurate negative information are just wasting your time. Through legislation enacted in the Fair Credit Reporting Act (FCRA), your creditors have 30 days to investigate any claim to determine whether the negative information being disputed is incorrect. Negative information may be temporarily removed from your credit report but will return if it is verified as true at any time, even after 30 days. In the meantime, the credit repair agency may print you a copy of your “updated” credit report sans your negative info. You may not find out until months later that your credit score has not actually changed.

If your credit score is quite low, some shady credit repair agencies will suggest creating a completely new credit record. In place of your social security number, the agency may try to secure a fraudulent Employer Identification Number (EIN) for you. This is essentially creating a new identity for you that you can use to start over with a fresh credit record. This is also a federal crime. If you fraudulently create a new credit record you will be held fully responsible for your actions and could face prosecution.

Credit repair agencies can charge a hefty fee for their services, regardless of whether their services actually do any good. You need to be aware of all the fees and potential costs before agreeing to let any credit repair agency go to work for you. Legally, agencies need to state in writing what the costs are for their services.

Credit repair agencies also cannot legally make any promises or guarantees they can’t back up in writing. If in doubt about anything the agency claims it can do, check with the Better Business Bureau and see if there are any complaints lodged against the agency. If there are no complaints on file, meet with a representative of the agency you want to do business with and make sure they aren’t making promises that they can’t possibly deliver.

Armed with the knowledge of what credit repair agencies can and cannot do, you should be able to find an agency that will meet your needs and help you clean up your credit report with a minimum of time and hassle.

© cashbuzz.com

John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

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