A sound credit rating helps you to go a long way and also indicates that you are financially disciplined and not another casualty in the liquidity crunch. Repairing credit and safeguarding your credit rating is of utmost importance. Failure to do so may deprive you of various financial benefits that are offered by banking as well as non banking financial institutions.

Your credit score helps lenders/creditors to decide whether you are a good candidate for credit. Your credit score, a 3 digit number shows your creditworthiness. The higher is your credit score the better it is. Your credit score highlights various aspects and include payment history, your outstanding balance, new credit, duration of credit history and the different types of credit you have used.

You have certain rights pertaining to credit repair and you should know them so that the chances of falling prey to credit repair scams are less. Given below are few aspects of credit repair. And if you follow them, your chances of maintaining a good credit rating are enhanced.

• If you come across any inaccurate information in your credit report, the same can be removed but no one has the legal right to remove negative information from your credit report.

• If you are refused an application for employment, insurance or credit, you can apply for a free credit report. However, it is mandatory that the request for the free credit report has to be made within 60 days of the denial.

• If you hire the services of a credit repair company, select a company with utmost care as incidence of credit repair scams are on the rise. If a credit repair company asks for payments before they are able to show you results, stay away as they may be scammers.

• Don't pay heed to mails sent by fraudsters posing as representatives of credit repair companies.

• Pay heed to the details in the credit report and read the fine print. If you find the information doesn't seem too familiar to you, contact the credit bureau immediately. You may be a victim of identity theft.

How to recognize a credit repair scam?
If you are planning to repair your credit with the help of a credit repair company, watch out for the following signs.

• If the company asks you to open a second credit file, step back. This practice is referred to as "file segregation" and it is illegal. The scammer asks you to use a different social security number or a tax identification number.

• The company fails to make you aware of your rights and tries to conceal facts about credit repair that can be done on your own.

• The credit repair company asks you not to communicate with the 3 credit bureaus directly.

You may come across companies requesting you to be a party to fraudulent activities. It is best to know your rights so that you can deal better with these credit repair companies and prevent yourself from falling into trap.