With the fallout of the poor economy, credit repair companies are popping up all over. There are an endless amount of credit repair companies that make guarantees about the services they perform. They make outrageous claims, have hard sell tactics, and then contact you daily until you finally sign up with their company.

Credit repair is possible, but only if you can avoid the scams that are out there. Here is a list of the most popular scams, and what you should know to avoid them.

SCAM: Our services will get you a new, clean credit file with all three reporting agencies.

REALITY: There is no legal way to set up a new credit file or to accomplish what is commonly referred to as file segregation. . A credit file is based on your social security number, birth date, and name. There is no way to ‘set one up’. Your credit file actually comes into existence when you apply for and obtain credit. It is an automated process that is done by a computer, not by a person. Some companies offer to obtain a Federal Tax ID number in order to use when you are applying for credit. The catch is that on the Federal Tax ID application, you must use your social security number, which is then cross-referenced on your credit file with the Federal Tax ID number. At one time, more than ten years ago, this method worked due to a loophole in the existing systems. With the new technology, it no longer works. It is also a Federal offense to even attempt this method, as it is an attempt to defraud the Federal government.

SCAM: We speak the secret language of the credit bureaus; we have a special relationship with the credit bureaus; we have a revolutionary, patented method of removing credit.

REALITY: Under the Fair Credit Reporting Act (FCRA), there are rules governing credit repair. There is no secret method, language, or relationship that will trump these rules. Making this claim is the equivalent of someone promising that they can remove tickets off of your Motor Vehicle Report. It is ludicrous and an outright lie. Many reports are surfacing regarding companies who offer outrageous promises to gain many customers quickly and then they take your money and close up shop. Since a high majority of these companies are overseas, you have no hope of ever getting a refund or enforcing the guarantee.

SCAM: Paying a deposit or upfront fee to begin services.

REALITY: The Credit Repair Organizations Act prohibits any company from taking money until after it does what it promised. Any company not following that Federal regulation is either overseas and not obligated to adhere to it, or a fraud. Even charging a small amount upfront is illegal and a bad sign.

SCAM: We will clean up your credit and get you a car, mortgage, or other type of loan.

REALITY: This is a recent scam that costs consumers the most. The consumer pays out for the credit repair services and then is told that they have been pre-approved for the loan promised. In the meantime, the fraudulent company mimics the lending institution, asking for more money and documentation to process the loan. You spend countless hours obtaining pay check history, bank statements, references [that take months to check out]. The consumer is duped into a false sense of security because they are sending documents to a ‘lending agency’. The consumer is made to feel lucky that a bank is even considering them for a loan. The process drags on for months. By the time you are fed up and ask for your money back, they have closed up shop and left town.

In the long run, the best choice for credit repair is a legitimate and referred credit repair company or an attorney. Unlike the thousands of scamming, unethical, and untrustworthy companies out there, I can recommend a credit repair company or attorneys who are professionals, who devote their entire careers to the field of consumer rights and consumer law.

By hiring an attorney, who specializes in credit repair, you can avoid being scammed by fly by night companies, who promise to make miracles happen and then shut down their web sites leaving you broke and confused. One such Law firm is Lexington law firm. Their team of professionals has been doing credit repair for years. As a credit repair specialist, Lexington law firm does not need to make empty promises. They have been helping people clean up their credit for years. They establish realistic expectations up front, and explain their plan of attack for your unique situation.

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