Credit repair has a very negative connotation. It is open to a lot of scams and is one of the most investigated financial industries. As a result of such problems a law was passed governing credit improvement entities, the Credit-Repair-Organizations-Act (CROA). In part the law states:

The Congress makes the following findings:

* Consumers have a vital interest in establishing and maintaining their credit worthiness and credit standing in order to obtain and use credit. As a result, consumers who have experienced credit problems may seek assistance from credit-repair organizations which offer to improve the credit standing of such consumers.

* Certain advertising and business practices of some companies engaged in the business of credit-repair services have worked a financial hardship upon consumers, particularly those of limited economic means and who are inexperienced in credit matters.

* The purposes of this title are:

(1) to ensure that prospective buyers of the services of credit-repair organizations (CROs) are provided with the information necessary to make an informed decision regarding the purchase of such services; and

(2) to protect the public from unfair or deceptive advertising and business practices by credit-repair organizations.

In spite of this law there still are many credit-repair organizations that aren't following the law. Make sure that any credit-repair organization that you decide to use is in fact legitimately providing credit-repair services that meet the CROA.

* No Credit-Repair Organization can charge upfront fees or prepayment for services. They can only bill for services and collect money for services after the services have been rendered. For example, they can change a "setup" fee but only after any setup processes have been completed.

* No Credit-Repair Organization can advertise or state that it can "guarantee" to remove negative items or any item from your credit report. Having items removed from a credit report is similar to filing a lawsuit. The Credit-Repair Organization is challenging inaccurate and negative items on your credit report on your behalf. As with a lawsuit, no one really knows what the outcome will be. Thus a Credit-Repair Organization is prohibited from saying they can guarantee to get these items removed.

* No Credit-Repair Organization can charge a monthly fee until after the monthly services have been rendered. This is similar to the upfront setup fee discussed above.

One way to tell if a credit-repair organization is professional or not is to check to see if they are a member of the National Association of Credit Services Organizations ( NACSO ).

From their website: "National Association of Credit Services Organizations' members go through a very strict and rigorous application and enrollment process to aid in the prevention of fraudulent activity throughout the credit services industry."

"NACSO's Standards of Excellence will go further than the Credit-Repair Organizations Act and touch on items essential to the honest growth of this industry."

Go to the NACSO website and enter the name of the credit-repair organization you are considering. If they are a member in good standing and are displaying the NACSO "Standards of Excellence" Seal, then you should be dealing with a reputable firm.

Are you in "Credit Prison"? Boy, it seems like it sometimes. Perhaps you have experienced a job loss, health problem, business loss or a divorce. The result was late payments or perhaps a foreclosure or bankruptcy.

With 7 to 10 year time frames for having the negative items removed from your credit reports, it sure does feel like one is doomed when it comes to credit following such an event. The result of less than stellar credit usually is:

* Higher interest rates on mortgages, car loans, personal loans, and credit cards. * Higher insurance rates. * Inability to get a job. * Trouble renting an apartment without a cosigner.

However, there are things that you can do now to help rebuild your credit. You can legally repair your credit, without resorting to illegal tactics such as getting a new identity (clearly a fraud), by legally challenging the credit bureaus to remove any and all inaccurate, outdated and unvalidated negative items from your credit reports.

How do you do this?

* Well, you could hire an attorney who is highly experienced in credit law. They challenge the credit bureaus and your creditors to "validate" each and every negative item on your credit report. They do their best to back the credit reporting agencies into a legal corner where the agencies have no choice but to remove the so-challenged negative items.

If an item can't be validated (not just verified) and some aspect of the reported item is inaccurate, the law requires the credit reporting agencies to remove such inaccurate, outdated and unvalidated items including bankruptcies, liens, judgments, late pays, repossessions, and foreclosures. The downside? Most attorneys will charge you thousands of dollars.

* You could hire a credit repair organization who consults with you, writes dispute letters on your behalf, and who knows the best and most effective ways to challenge negative information and improve credit scores.

As discussed above, many of these are scams and some can be very costly charging upfront and monthly fees that total hundreds if not thousands of dollars to do the same thing you can do.

However, many are reputable and professional. As noted above, make sure anyone offering credit repair services meet all aspects of the CROA (Credit Repair Organizations Act).

Also, many states have special regulations for Credit Repair Organizations. Check them out for your state, and also contact the Better Business Bureau for your area to see if there are any complaints against the CRO you are considering.