As lending rules get stricter by the day, an increasing number of consumers are desperately looking for ways to improve their credit ratings. Due to the current credit crunch, lending companies only cater to credit-worthy borrowers with an excellent payment record. If you are one of the 30 million with less than perfect credit score, then you’ll most likely need credit repair.

Today, the phenomenal growth of the credit repair industry owes its success to the many consumers desperately looking for ways to beef up their ailing credit scores. Credit repair professionals help push up their clients’ credit rankings by promptly pointing out and eliminating such glaring defects like delinquent accounts, late payments and incorrect credit reports. It goes without saying that clients keep pouring in.

There are, however, some black sheep in the business who resort to various deception and below-the-belt tactics. The U.S. Public Interest Research Group warns that unscrupulous operators proliferate in the industry with their bag of dirty tricks, and charges anywhere from $500 to thousands of dollars.

These shady operators posing as legitimate credit repair experts promise to boost credit ranking by adding valuable points to their clients’ sagging scores. They will then ask for a fat upfront fee which the gullible client coughs up. After that, they will vanish from sight and bring their trade to a new place under another name. The client should have spent the money for paying bills instead.

Some legitimate credit repair companies use unconventional methods to enhance a client’s credit score. This may include exploiting loopholes in pro-consumer laws that may push up a persons credit ranking temporarily.

Unfounded disputes are one of the techniques most commonly employed. This involves disputing a negative but nevertheless accurate entry on the client’s credit report. This technic exploits a provision in the Fair Credit Reporting Act where consumers can question and strike out inaccurate, unverifiable, false or out-of-date information from their credit report.

This technic works under the premise that by sending the credit reporting companies a deluge of dispute letters, they can somehow make the company strike out the “offending” entry from the report, thereby adding precious points to their clients score card. A lot of financial critics frown on this method.

There are a lot of respectable credit repair agencies, but it will take a trained and watchful eye to distinguish the good ones from the bad. In case you need to seek credit repair help, it will be beneficial to watch out for the following warning signs of rouge credit repair companies:

• They require upfront payment for their services. The Credit Repair Organizations Act states that credit repair agencies cannot demand payment until their service is completed.
• They don’t inform you of your legal rights and the steps you can take through your own free will. This includes getting in touch with your creditors yourself to challenge any wrong entry in the report.
• They discourage you from directly communicating with a credit report agency.
• They encourage you to question all entries in your credit report, even the accurate ones.

At the end of the day, the most sensible way to enhance your credit score is to apply good credit practices and use cash for purchase more often.