TIME AND ONLY TIME heals all the wounds inflicted on a consumer's credit report by unpaid debt. And we're not talking a short time. Credit bureaus can list negative information for seven years. Bankruptcy information shows up for as long as 10 years.

Unfortunately, there is an abundance of enterprising scam artists eager to prey on desperate consumers by convincing them otherwise, that for a fee, of course promise they can wipe your slate clean faster than you can say, "Charge it."

For people receiving embarrassing calls from creditors or in dire need of a mortgage loan or money for some important purpose like medical care, it's easy to see why many might be tempted by promises to make their credit well again.

But don't be fooled. Bad credit can t legally be removed from your record. The only way to repair credit is by paying off old debt and establishing a record of regular on-time payments. Anyone promising immediate solutions to your problem should raise a big red flag.

To protect consumers, there is a law called the Credit Repair Organizations (CRO) Act to limit the claims such organizations can make. The Federal Trade Commission and the Department of Justice make periodic sweeps to crack down on fraudulent practices. Nevertheless, credit-repair schemes are thriving on the Internet and attracting customers through e-mail marketing. Some businesses do operate within the guidelines of the CRO Act. But for a sizable fee of up to $1,000 or more, these flimflam artists only do what you could with a letter and a stamp.

File Segregation

Perhaps the most egregious scam is file segregation. Unfortunately, consumers who fall for this might wind up with more than continuing bad credit. They could win a criminal record as well.

Here's how it works: The credit-repair agency tells you how to get an employee-identification number (the nine-digit substitute for a Social Security number sometimes assigned to household help, like live-in nannies) from the IRS. The debtor then uses this number to apply for new credit, substituting a different address and phone number one of a friend, perhaps. This makes it difficult for creditors to link your latest identity to your previous credit history. Then consumers are told to build up good credit by getting a new bank or retail credit card and paying it off quickly.

These services advertise their methods as "completely legal" which should set off alarm bells right there. In essence, they are assisting you in creating a false identity, which is a felony.

First, Correct Errors

How can you legitimately repair your credit report? First, correct any errors. The Fair Credit Reporting Act entitles consumers to dispute information on their credit report when they think it's wrong. If you've recently been denied credit, the creditor that turned you down must give you the name, address and phone number of the credit bureaus it used. You then have a right to a free copy of that report. Thanks to the FACT Act of 2004, consumers in all states can also receive one free credit report a year from each of the three major credit-reporting bureaus, Equifax, Experian and TransUnion.

The only authorized site for the free credit reports is AnnualCreditReport.com. You can also order a copy of your credit report directly from the credit bureaus at any time for a small fee.

Errors are common, so be sure to check your credit report a couple of times a year. If you come across a suspicious item, contact the creditor, and if the issue remains unresolved, dispute the item with the credit bureau. Through the bureaus, consumers can add a personal statement to their credit reports about a specific item, providing details that they feel may be relevant to creditors.

Paying for What You Can Do for Free

If, however, the negative information is accurate, there's nothing a consumer or credit-repair company can do to change it. That's when people get into trouble, by heeding agencies' claims that they have the power to remove negative information.

Legitimate credit-repair organizations simply charge you to review your report and help you get any errors corrected. This can save you time and spare you some hassle. But you ll have to pay for the convenience.

Credit monitoring is another service marketed to help those concerned about bad credit. These services will monitor your credit report regularly and alert you of any problems. This might help you find out more quickly if you ve become a victim of identity theft (which is when people use your credit history to get their own credit). But their fees tend to be steep. You can get a credit report from the major services for a fraction of the price.

So before you shell out money unnecessarily, try to clean up your report on your own. "There's nothing that a credit-repair company can do for you for a fee that you cannot do for yourself for little or no cost," says the FTC in its Credit and Consumer Rights statement.

If you do decide to sign on with a service, be sure you know your rights under the CRO Act, which is summarized on the FTC Web site. It states that you do not have to pay until the promised services have been performed.

Finally, remember that the surest way to fixing your credit is by paying off your bills on time. If you need help, there are nonprofit agencies that can assist you in negotiating with creditors and creating a budget that works for you. To find out how to get it touch with them, see our article, "Help! I'm Drowning in Debt."