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Marred credit? U.S. goes after repair scams

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WASHINGTON — "Bad Credit? No Credit? No Problem!" Does that sound familiar?

The U.S. government thinks it's an all-too-familiar problem and said Monday that it had put more than 180 Web sites on notice because their claims to restore a poor credit rating may violate the law.

It issued these warnings after officials from the Federal Trade Commission, the Department of Justice and 47 other federal, state and local law enforcement and consumer protection agencies surfed the Web looking at services that promise to restore creditworthiness for a fee.

In a statement, the FTC accused the sites of luring customers by making deceptive advertising claims or promoting illegal schemes. Many "guarantee" that they can remove negative information from consumers' credit reports, even if the negative information is accurate and timely.

Over 60 credit repair operations sold instructions on how consumers can illegally substitute a false Social Security number for their current number and "start fresh" with a new credit identity.

The FTC said that these credit repair operations cannot remove negative information from consumers' credit reports.

In addition, any credit repair service that claims it can improve a consumer's credit report and charges for that service in advance is violating the Credit Repair Organizations Act, a new federal law designed to help consumers combat credit repair scams.

Under the law, the more than 180 sites warned by regulators could face seizure of their assets and be forced to compensate consumers who used their services.

Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, said there was only one way to restore a person's poor credit rating: the hard way. "Only time and a personal debt repayment plan will improve your credit report," she said.