Types

Credit repair clinics can be run as a nonprofit or for-profit. Nonprofits usually try to genuinely help those with bad credit, but some for-profit clinics register as a nonprofit and still charge fees, according to FindLaw.com.

Function

Credit repair clinics scan credit reports for incorrect information and dispute all negative marks on a credit report in hopes that the credit agency will remove most of them due to the work involved in verifying their accuracy, according to Nolo.com.

Misconceptions

In general, credit experts, such as the credit bureau Experian, warn that credit repair clinics are unnecessary and simply charge people for performing services the individual could have done himself for free.

Illegal Tactics

Some credit repair clinics swap credit files with one belonging to a deceased individual, according to Nolo.com. Others may suggest the person create a new identity by using a nine-digit digit IRS Employer Identification number instead of Social Security number, which can land the person in jail .

Warning

According to CreditLoan.com, when credit clinics dispute a negative item, the law demands that credit reporting agencies take it off the credit report until the creditor reaffirms its accuracy.

Source:

FindLaw.com: Don't Use a Credit Repair Clinic

Nolo.com: Don't Use a Credit Repair Clinic

Experian: Credit Repair

More Information:

CreditLoan.com: Stay Out Of Credit Repair Clinic Periphery