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  Dear
Dr. Don,
My daughter claimed bankruptcy a few years ago. She recently went
to a meeting held by someone claiming they can help her improve
her FICO score for a monthly fee. Is this possible, or is it a scam,
like I told her?
-- Larry Leery
 Dear
Larry,
The likelihood that this service can do more for her than some simple
steps she can take on her own makes it a waste of money, if not
a scam.
One scam that does attract people
trying to clean up their credit report is something called "file
segregation."
Here's what the FTC says in its
Facts
for Consumers guide:
If you have filed for bankruptcy, you may
be the target of this credit repair scheme called "file segregation."
In this scheme, you are promised a chance to hide unfavorable
credit information by establishing a new credit identity. That
may sound perfect, especially if you're afraid that you won't
get any credit as long as bankruptcy appears on your credit record.
The problem: "File segregation"
is illegal. If you use it, you could face fines or even a prison
sentence.
Firms that market this practice are violating
the provisions of the Credit Repair Organizations Act and consumers
taken in by this scam may have legal recourse against the firm.
The FTC guide also explains a victim's rights under this law.
A FICO score is based on a consumer's credit
report. The passage of time, along with a solid payment history
will rebuild your daughter's FICO score. While a Chapter 7 bankruptcy
stays on her credit report for 10 years, it won't take 10 years
for her to gain access to credit.
The Bankrate feature, "Making
the climb out of subprime," has solid advice on rebuilding
a credit history. Best of all, it's free. That combined with the
free annual credit reports available from the credit reporting
agencies will allow your daughter to track her progress during the
rebuilding years. She can do this on her own without paying someone
to help her.
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