Personal finance Q&A: Don’t hire a credit repair firm

Dear Liz: I’m seeking help in reviewing my credit report and how to fix any issues. I am not financially distressed, but have FICO scores in the 675 range. Could you recommend someone I can hire to assist as I need to refinance a house I bought for cash?

Answer: There’s so much fraud in the credit repair industry that you’re likely better off doing it yourself rather than exposing yourself to rip-offs.

Credit repair companies aren’t supposed to take money upfront or promise things they can’t deliver, but many do.

One of the scammers’ most common ploys is to flood the credit bureau with disputes and to take credit for any negative information that temporarily disappears. By the time the negative information pops back up on the file, the scam artists have disappeared with your money.

Another approach they recommend is starting over with a “clean� slate, sometimes using borrowed or stolen identification numbers. That’s fraud, and even if it works, you’ll often find yourself worse off with no credit history than with a flawed history.

The Federal Trade Commission has some helpful advice on do-it-yourself credit repair.

You’ll need to first get copies of your credit reports from each of the three credit bureaus, which you can do once a year for free at www.annualcreditreport.com. Dispute any inaccurate information, such as collection accounts that aren’t yours or late payments that you made on time.

Follow up with any creditors that persist in reporting bogus information.

One relatively fast way to improve your scores is to pay down any credit card debt to 10% or less of the accounts’ credit limits. Don’t close any accounts while trying to improve your scores, since that won’t help your score and could hurt.

Opening new accounts can ding your scores as well, but it can be worth it to add another credit card to the mix if you only have one or two.

Shopping for insurance is worth the effort

Dear Liz: I pay about $670 per month for insurance for four cars, our home and a $1-million umbrella policy. We’ve been with the same well-known national insurance company for over 30 years. About five years ago, I checked with another well-known national insurance company about the estimated total premium, which was not significantly different from what I paid.

We filed a claim for a very minor accident about two years ago. My 21-year-old son, 17-year-old daughter, my wife and I drive these cars.

Should I have my coverage reviewed by another company?

Answer: Of course you should. And you should check with more than one.

Premiums can differ dramatically, particularly for younger drivers. A recent Consumer Reports investigation found that although some companies doubled or even tripled auto insurance rates for a teen driver, others barely budged.

Premiums also can change over time as insurers try to build or protect their profits. Insurers will lower premiums to attract more business and raise them to cut losses.

Price isn’t the only thing you should consider. Customer service is important too, so review your state’s complaint survey to see which insurers tend to draw customer ire.

Shopping for insurance isn’t fun, but saving hundreds or even thousands of dollars is. You should make the effort at least every few years.

Questions may be sent to Liz Weston, 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact� form at asklizweston.com. Distributed by No More Red Inc.