Beware of credit-repair scams
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Scam No. 2: We can convince the creditor that you don't really owe this debt.

What you need to know: This is along the same line as people who claim that the Internal Revenue Service is illegal, or challenge the validity of U.S. currency. The way it works is similar to the previous scam. Con artists will come up with a scheme to have you challenge the debt or will bombard the debt holder with procedural requests that will supposedly make them drop the claim, says Deanne Loonin, staff attorney with the National Consumer Law Center. "Federal agencies have described these schemes as bogus," she says.

"There are times when consumers do have defenses to debt," Loonin says. And that's when it's time to bring in a lawyer.

Scam No. 3: We can get you a new, clean credit file.

What you need to know: Not legally. Some firms will try to get customers to apply for new taxpayer identification or Employer Identification Numbers (also called an EIN) for the purpose of building a new credit history. It's a felony, says Ridout.

But the reason people get taken is that con artists don't explain the whole scheme, so consumers don't realize what they are being asked to do. Consumers also may not know that getting a new number to create a new credit history is illegal. And the whole concept is based on faulty reasoning, says Ridout. Since the new file will list the same name and address, it would still have all the same information and history, even with a new number.

Beware if anyone talks about getting you a new credit file, file segregation or a fresh credit history.

Scam No. 4: We can clean your credit fast and use our contacts to get you a mortgage (or credit card or loan).

What you need to know: This is one of the more recent credit repair scams -- and one of the most costly, says Ridout. Con artists dangle the promise of much-needed money or loans in front of desperate consumers as an incentive to pay, pay and pay. Some scam outfits mimic credit counseling agencies, others imitate mortgage companies, says Ridout. But all they do hit you up for money (sometimes several times) then leave you empty-handed, he says.

And since there are genuine community nonprofit groups that help educate consumers and help with affordable housing issues, scammers may also try to imitate that business model. The best advice: Hold onto your wallet, and be wary of any big promises or fast fixes. Reputable community-based organizations focus on education, and they don't charge hundreds for it, and work with lenders and government agencies you should already know. When in doubt, do a little reference checking on the Internet, with the state regulatory or consumer offices and with local offices of nonprofits and community groups you trust.