—Illustration by Alex Nabaum

Beverly White, 58, a foster mother who lives in Charlotte, N.C., just wanted to provide her “at-risk” children with a stable home to call their own. But with a low FICO score—a measure of one’s credit risk—she couldn’t get a mortgage.

So in the fall of 2007, at the suggestion of a real estate agent, she turned to a credit repair company. “For an upfront fee of $1,400,” says White, “I was told that all negative items on my credit report would be erased and my credit score would be increased by several hundred points in just two months.”

By New Year’s, White, a behavioral therapist, saw no improvement, so she called for answers. But the “credit repair specialist” who took her money had vanished.

It’s a story that’s becoming more common, as banks and other lenders tighten the credit reins. “In the last year, we’ve seen an increase of 50 percent in reports of credit repair scams,” says Steven Baker of the Federal Trade Commission (FTC). “And to date, we’ve never seen a legitimate credit repair company.”

These duplicitous companies, Baker says, make false promises of having inside connections and knowing legal loopholes to “clean” your credit. They claim they can improve a score by erasing bad debt, bankruptcies or foreclosures from your credit history, in a matter of months and usually for an advance fee of up to $2,000.

Most just take the money and run. Others simply flood credit-reporting bureaus with frivolous disputes over your debts, which may make them disappear briefly while they are investigated. “But it only puts your credit file in a ‘pending’ status, and no lender will lend you money,” says Tom Bartholomy of the Better Business Bureau (BBB). “It does nothing to improve your credit score.”

Here’s what to do if you’re in a credit crunch:

• Know the realities. Anyone who promises to remove accurate debt information from your credit history is lying. Under federal law, debt remains in a credit report for about seven years; bankruptcies stay listed for 10 years. And it’s illegal in many states to accept an advance payment for any debt-adjusting service.

• Monitor your file. You are entitled to three free credit reports each year at Annualcreditreport.com. (FICO credit scores start at $10 at Equifax and TransUnion; Experian no longer provides them.) Check for any fraudulent debts resulting from identity theft, which can be legally removed at no charge by contacting those three agencies yourself.

• Get legitimate help. Bona fide credit counseling services usually arrange a structured repayment or consolidation plan for free or for a small fee. The National Foundation for Credit Counseling (1-800-388-2227) operates the largest and most respected network.

• Be like Beverly. She bought a house last year after paying down her previous debts. She says she raised her credit score after contacting her creditors and stuck to a repayment schedule.

For more information, visit the FTC website and type in “Credit Repair Scams.” If you’ve been victimized, contact the FTC, your state attorney general and your local BBB chapter.

Sid Kirchheimer is the author of Scam-Proof Your Life, published by AARP Books/Sterling.