Bernie Madoff's high-profile scam landed him in jail for the next 150 years, but he's just the tip of the iceberg. There are plenty of other financial scams out there bilking innocent people of their hard earned money. They just aren't headline news. (Want to find out about other scams? Check out 4 History-Making Wall Street Crooks.)

One of the most prevalent scams, especially in these rough economic times, targets consumers with poor credit history by promising to clean up their credit report so they can get lower interest rates and more access to credit for things like cars, homes, etc. For people in need, this sounds too good to be true. Which it is. Slogans like, "Turn your bad credit into good credit FAST!" are sure signs of a scam.

Here are some other warning signs that should ring your scam alarm:

  • Suggesting that you can establish a new identity, and therefore get a totally clean record.
  • Preventing you from contacting the major credit reporting agencies on your own.
  • Asking you to pay in advance.
  • Offering to wipe out your debts without borrowing.
  • Asking you to mislead or dispute correct information.
  • Suggesting that this is a simple matter and your credit can be repaired quickly.
  • Ignoring what you can do for yourself for free.

By steering clear of scams, you will avoid adding to your credit problem. But to solve the problem and actually create good credit, start with the following:

  1. Get Your Free Credit Report
    The only website the Federal Trade Commission recommends and the only one sponsored by the three major credit rating agencies is http://www.annualcreditreport.com/. Be careful to get your credit report from the official site, not a like-sounding, well-advertised competitor.

  2. Review your Report
    Look for anything that isn't true. If you find something, then dispute it by contacting both the credit reporting agency and the firm that reported it. (To learn more, read How To Dispute Errors On Your Credit Report.)

  3. Make Sure All Good Credit Accounts Are Accounted For
    Some local retailers, credit unions, or similar firms may not report to the major agencies. Contact them and ask to have them added to your file. The more good credit you have, the less important the bad credit will be.

  4. Be Patient
    If your report is accurate, but your score is lower than you want it to be, realize the biggest factor in repairing it is time. So fixing your credit will likely take longer and be harder than you would like, so start right now.

  5. Determine How You Got Here
    If is lower than you'd like as a result of overspending, create and stick to a budget. If you lost your job so you didn't have income to pay your bills, when you get working again establish an emergency savings account so it doesn't happen again. If you were just lazy and didn't bother to pay your bills on time, create a system that will remind you of when they are due. Remember that when in a hole, it's best to stop digging.

  6. Contact Anyone You Can't Pay and Try to Work Out New Terms
    This is especially important for items that haven't shown up on your credit report yet. That may avoid credit problems before they happen. Ignoring the problem will likely push you into a debt collection service, putting a big ding in your credit score.

  7. Review Your Lifestyle
    You can still enjoy life without doing the things that put you into a financial bind. If you replace old habits with new ones that you hate, they won't stick. So find a new way of doing things that excites you and you can live with. (Keep your costs low this summer, read Budget-Friendly Summer Fun.)

  8. Avoid Bankruptcy
    This is the last resort and only to be used if the situation is truly hopeless. It will stay on your credit report for 10 years. There are lots of bankruptcy scams out there waiting for you too.

  9. Don't Commit Financial Suicide
    Throwing your hands up and going on a spending spree when facing a difficult financial situation. Even if things are really bad, life isn't over. Don't make things worse.

  10. Realize That You Can Still Borrow
    Lenders often use shame to increase interest rates or decline loans as a poor credit score can make anyone feel less worthy. If you must borrow money, shop around and don't be shy about explaining what happened and why you feel you are credit worthy. All lenders don't look at credit reports the same way, and attempts to change your ways may have more impact than you think.

The quick credit fix, while appealing, should be met with healthy skepticism and ring the scam alarm. If it's too good to be true, it isn't true. The real credit fix, the one that actually works, comes from making sure your credit report is accurate, constantly complying with the terms of credit agreement, and allowing the seven years for any bad history to pass. (For more tips, check out Five Keys To Unlocking A Better Credit Score.)

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