By Senior Officer Larry Jacobs
Crime Prevention Division, SSPD

We have seen them on late night commercials, on the side of the roads, on billboards, on flyers and everywhere else you can imagine. They are “How We Can Fix Your Credit Problems” businesses.

They claim to be legitimate and can fix your bad credit for a fee. My advice is to fix your credit yourself or go through a legitimate credit counseling service. Check out the National Foundation for Credit Counseling (

You can also obtain more information on fixing your credit from the Better Business Bureau, the Federal Trade Commission and Clark Howard.

Here is some basic information on the debt and credit repair scam business.

The Rip-Off:

If you have bad loans or a bankruptcy on your credit report, you may be advised by a dubious credit repair company to stop paying your creditors and deposit money into a special account instead. In theory, you’ll pay off your debt in one lump sum, thereby saving you money.

But in the meantime, the debt settlement company promises to negotiate with your creditors to get them to accept less than the amount owed. In reality, they withdraw fees (up to 20 percent) from your “special account” for their “services.”

The Tip-Off:

These shady businesses typically deduct their fees long before they help you become debt free. However, starting in October 2010, they cannot charge you until they settle some of your debt. If they do, they are breaking the law.

A government report found less than 10 percent of clients successfully complete these debt and credit repair programs.

How to Protect Yourself:

Stick with a legitimate nonprofit counseling outlet that has an established record of helping people. A great source is the National Foundation for Credit Counseling (

You also might want to try to negotiate with your creditors on your own. Your might get the same or even better results and save yourself some money in the process.

Thanks to and Susan Stellin for the information in this article.