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Getting started with repairing your credit is one of the very best things you can do for your financial well being. At the hands of the credit system, you are being abused in the form of inaccurate reporting and an unfair credit scoring model. Through credit repair, you can do your part to make sure you get the credit score you deserve – a credit score that is truly indicative of your credit worthiness.

Choosing the right credit repair company to help you achieve your credit goals is pivotal. What follows are tips and things you should look for when choosing the best credit repair company for you.

1) Look for a credit repair company with experience

An experienced credit repair company will have taken the time to learn what tactics work best for each type of dispute. Having a large number of clients and a track record of removing many items means that a credit repair company has enough information to know what works and what does not.

2) Look for a credit repair company that has been in business for a while

Credit repair, like many other industries, has it’s fair share of scammers. Preying on desperate people who long for a better credit score, fraudulent “credit repair” companies promise amazing results but the only thing they manage to do is take off with your money.

Fortunately, these companies never last very long. They are either run out of town or shut down by the FTC or local law enforcement. What this means for you is that you can usually trust a credit repair company that has been in business for a number of years.

3) Check out the company’s BBB report

To start with, look for the BBB’s rating of the company and their explanation of this rating. For example, the BBB report for the credit repair company Credit Bureau Experts shows the company as having an unsatisfactory rating because of unsubstantiated advertising claims made on their site.

Also look at the number of unresolved complaints to see if the company has been responsive to their customer’s problems. Almost all companies will have some complaints, and the larger the company the more complaints it will have, but it is how they deal with these complaints that is important. Look for a company that addresses the concerns of its clients as opposed to a company like Credit Fix Now (see BBB report) who has an unsatisfactory rating with the BBB for not responding to to complaints.

4) Get the details on the company’s payment policy

A common tactic of fraudulent credit repair companies is to charge you a large fee upfront and then either disappear with your money or otherwise not perform the agreed upon work. Many of the companies have been known to charge several hundred or even thousands of dollars before they will do any credit repair work.

Even though the practice of charging large upfront fees is illegal, there are still a number of smaller credit repair companies that try to get away with it. For example, the companies Credit Clean and Today’s Credit Solutions are perfectly content to charge you one time fees of $1223 and $499.99 respectively for a year’s worth of credit repair service. Granted, these companies may offer money back warranties, but that will be of little use to you if the company goes out of business or otherwise disappears.

5) Watch out for companies that guarantee to raise your credit score

To help protect you against credit repair companies who make impossible claims, the Credit Repair Organizations Act also forbids any credit repair organization from making guarantees about the results of their service when it pertains the the effect it will have on your credit reports.

While searching for a credit repair company, take note of any claims to “increase your credit score by 100 points”, “lower your interest rates”, or “remove all negative items from your credit reports”. No company can legally make these claims and any company who implies they can should be avoided.

In years past, the credit repair industry was tainted by fly by night credit repair clinics and other credit fixing scams. Despite the need that many people had to get help with repairing their credit, it was hard to find a credit repair company they could trust.

Today, the credit repair industry has matured thanks to increased awareness and federal regulation. The keystone of this regulation is the Credit Repair Organizations Act, also known as CROA. Recognizing the value of professional credit repair services, Congress enacted CROA in order to define appropriate actions of a credit repair organization and to outlaw many of the practices typical of a fraudulent credit repair clinic.

While there are still some fraudulent credit repair organizations trying to take your money, by understanding the basic ideas of CROA, you can easily identify these scams and make sure you avoid them. Knowing what things credit repair companies are and are not able to do, will keep you from becoming a victim.

Below are three key points of CROA and what they mean to you as you are shopping for a credit repair company.

1) Credit repair organizations cannot charge fees for services before they are rendered

Most credit repair scams start off the same way. You are required to pay a large upfront fee, often times in the range of hundreds or even thousands of dollars. Then, after you have made the payment, the credit repair company does little or nothing to repair your credit and in some cases, simply disappears with your money.

To keep you from becoming a victim of this type of scam, CROA prevents credit repair companies from charging for services before they have been provided. If a credit repair company charges a set up fee, they cannot collect that fee until after the task of setting up your case has been completed. If a credit repair company charges monthly fees, those fees cannot be collected until after a month’s worth of services have been provided.

Keeping this requirement in mind is probably the most important thing you can do to avoid becoming a victim of a credit repair scam. Even today there are companies like Champion Credit Consulting and Credit Clean who will try to charge you $795 and $1223 before they have done anything to repair your credit.

2) Credit repair organizations cannot make incorrect or misleading statements

Preying on the naivety and lack of knowledge of people looking to improve their credit, many credit repair companies entice people with claims of improving their credit score 100 points in 60 days or removing bankruptcies from their credit reports. The truth is that while it is possible for each of these things to happen, no credit repair company can promise that they will.

In fact, no credit repair company can promise to remove anything from your credit reports because ultimately, it is up to the credit bureaus what items are listed on your reports. Disputing credit is not failsafe. There are cases where no matter what you do, a particular negative item will not be removed from your credit reports.

Any company that promises to increase your credit score or remove any negative items from your credit reports is violating the law. According to CROA, and the nature of the credit system, the best any credit repair company can do is promise to put forth a best effort. Just like in a court of law, a lawyer can promise to work as hard as they can, but they cannot promise that you will win over the jury.

3) Credit repair companies must inform you of your rights

The credit system is not easy and many people do not adequately understand their rights within the system. This lack of education makes it easy for con-artists to prey on the unaware.

So you do not get caught off-guard, credit repair organizations are required to inform all prospective customers of their right to order their own credit reports and their right to dispute the questionable information they contain. They are also required to inform you of your right to cancel your credit repair service within 3 days of signing up for no reason and with no penalty.

When signing up with a credit repair organization, CROA dictates that you should be presented with a disclosure statement titled “Consumer Credit File Rights Under State and Federal Law”. This statement describes the rights mentioned above.

CROA has changed the landscape in the credit repair industry and has been very effective in helping the FTC identify and prosecute shady credit repair organizations. Because of CROA, you can feel confident that your money will be well spent when you enlist the services of a legally compliant credit repair company.