You probably know that your credit history affects your ability to obtain mortgage credit and buying homes. You also probably are aware that you have the right to obtain a copy of your credit report and to challenge incorrect information. What the "credit doctors" suggest is that they can use this process to ensure that your credit file will show up as clean when you apply for a mortgage when buying a home.

Credit "doctors" are a rip-off because (a) you probably do not need them and (b) if your credit history truly is bad credit they cannot help you. They are vultures out to prey on your fear of not obtaining credit for home buying.

One reason that you do not need the credit "doctor" is that your credit history does not have to be perfect or bad to obtain a mortgage loan. A standard mortgage industry joke is the "30-day late from Sears." For a while, Sears reporting was known to be so unreliable that the joke was if your report did not show a late payment on your Sears account then there must be something wrong with you. Regardless of whether you have had problems with a Sears account or another account, you do not need perfectly clean credit history to obtain buying a home.

In very rare instances, your credit file may get polluted with bad information from someone else's credit file. You can learn about this by obtaining a copy of your credit report. If you are turned down for a mortgage loan because of your bad credit history, ask your lender for a copy of the credit report. If it is clearly a case of a messed-up file, talk to your lender about getting it straightened out. The lender wants to make the loan, and they will be glad to help without charging you the "credit doctor" fee.

Finally, if your credit file truly reflects a history of lapses on your part, the "credit doctor" may only make things worse. For example, if you fire off a series of disputes to the credit reporting agencies, these will be resolved quickly (because the law requires quick resolution to protect consumers). Because the timing of dispute resolution may vary across agencies, mortgage lenders who obtain multiple credit reports (and nearly all of them do so) will see conflicting reports, which is a red flag that forces them to scrutinize your credit more carefully.

A particularly dangerous suggestion that I've seen posted to newsgroups is that you can clear up your credit by obtaining a new social security number. Do not pay a credit "doctor" to do this for you. First, obtaining a social security number for such a purpose is illegal. Second, it does not cost you anything to apply for a new social security number yourself, so there is no reason to pay someone else to do it for you. Third, a new social security number will not help you with your bad credit and buying a home. Some credit repository algorithms will link your new number to your old number based on your name and address (they need this capability because sometimes social security numbers get mis-typed). And if they don't, it's even worse. If you are say, 32 years old, and have a credit file that only goes back 6 months, you may have a more difficult time getting a mortgage than if you had a credit file with a couple of bad trade lines in it. Length of credit history is one of the most powerful indicators of credit quality, so having a "fresh" credit file is nothing but a big red flag.