Consumers can improve credit reports, but some options are not legitimate

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According to the Better Business Bureau, consumers can improve their credit profiles with little or no out-of-pocket cost, but the agency cautions that many people are falling prey to fraudulent "credit repair" companies that claim they can improve or write new credit profiles usually for a hefty fee. |ret||ret||tab|

Fraudulent credit repair companies may encourage consumers to create a "new" credit report or identity by applying for an Employer Identification Number to use instead of a Social Security number. An EIN is used primarily by businesses, and obtaining an EIN under false pretenses is a crime. A credit repair company cannot remove negative, but accurate, information from a credit report. It will be removed only after the required amount of time as stated in the Fair Credit Reporting Act. |ret||ret||tab|

To legally improve their credit profile, consumers should:|ret||ret||tab|

Remember to pay all bills on time. When payments are delayed or delinquent, late fees are charged, more interest accrues and credit health is negatively affected.|ret||ret||tab|

Apply for a department store card or gasoline credit card, which are often easier to qualify for, and pay those bills on time.|ret||ret||tab|

Contact card issuers immediately when bills are not paid on time, or when errors have been found on a bill. Be sure to make any complaints, and get corrections, in writing.|ret||ret||tab|

Maintain a small number of credit cards and close unused accounts.|ret||ret||tab|

Creditors look at potential for going on a spending spree and falling too deeply into debt. The more credit cards a consumer has, the larger their debt potential.|ret||ret||tab|

Keep debts reasonable. Financial experts say that, as a rule, non-mortgage debt payments should not exceed 10 percent to 15 percent of take-home pay each month. If debts are higher than that, try to reduce them before applying for another loan.|ret||ret||tab|

Avoid unnecessary inquiries. Any time a creditor or other business is authorized to check a credit report, an inquiry is added to the report. If there are a large number of inquiries in a short amount of time, creditors may infer that the consumer is either applying for too much credit because of financial difficulties or taking on more debt than he or she can repay.|ret||ret||tab|

Consumers should order a copy of their credit report at least once a year from each of the three credit reporting companies to stay on top of changes to their credit profiles and to check for identity theft.|ret||ret||tab|

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