Credit repair companies primarily help people implement strategies to ameliorate their overall credit worthiness. These businesses, which offer free and/or fee-based services, typically review an individual’s credit report and prescribe ways to boost credit through strategic tactics like paying down debt, paying on time, and disputing errors on their credit report. However, the process of credit improvement should begin with consumers having some basic knowledge about credit, says Emanuel Rivero, director of the Hispanic Centers for Financial Excellence at Money Management International (MMI). He explains: “They need to understand what makes up a credit report: 35 percent is based on your payment history; 30 is how much you owe; 15 percent is the length of your credit history; 10 percent is recent applications; and 10 percent is credit mix.”

Wells Fargo Greater Alaska District Manager Chris Shockley considers consumer education a key prerequisite for credit improvement. “We’ve got to make sure that folks understand what credit is and why it’s important,” says Shockley, who oversees nine Wells Fargo branches and sixty-five team members on the Kenai Peninsula and in Western Alaska. “It takes education and a good plan to make sure your bills are paid on time, revolving credit isn’t used to capacity, and spending habits are kept in check.”

A reputable credit improvement business can help people address all of these areas as well as broader issues. However, consumers should be aware that there are debt settlement, management, and consolidation companies masquerading as credit counseling agencies. While debt management businesses are not necessarily illegal or disreputable, they may not be licensed to provide credit-repair services. There are good and bad players in this arena, and consumers should know some of the red flags associated with unscrupulous companies, says Rivero, who oversees MMI’s small business, student loan, and web-based counseling programs. He cautions: “If they’re asking for payment before they do anything, that’s illegal. If they won’t send you an agreement to review… If they ask you to do shady things like claim identity theft… or if there’s anything that seems dishonest, I would label that as a scam.”

Credit Monkey CEO Dion Rostamian suggests using a direct approach to vet an organization’s service offerings. “Simply asked them if they are licensed and bonded and what their license specifically covers,” he says. “Ask if they are a debt settlement company or a credit repair organization.”

The bottom line: Consumers need to be aware of the differences between credit repair/counseling and debt management services so they can solicit help from the most appropriate organization.

Like most states, Alaska has a range of organizations available to help people improve their credit history. To legally operate in the state, businesses generally must be licensed with the Alaska Division of Corporations, Business, and Professional Licensing. In Alaska, MMI is, reportedly, the only licensed credit counseling agency approved by the Department of Housing and Urban Development (HUD).

MMI is a nationwide network of nonprofits that provide consumers with free credit counseling and education. The agency offers a range of services through its Anchorage office, including financial management/budget counseling, mortgage delinquency and default resolution counseling, non-delinquency post-purchase workshops, rental housing counseling, pre-purchase home buying education workshops, and predatory lending education workshops.

Alaskans can visit MMI’s Anchorage office for a face-to-face meeting with a certified counselor, who can provide a free financial analysis and strategies to help enhance their credit. “We will sit down with them… We will come up with an action plan based on the information on their credit report,” says Rivero.

As a nonprofit, MMI receives contributions from major creditors and provides most of its services free of charge. In addition to offering counseling, the agency provides professional debt management services that are customized to consumers. If individuals opt for a debt management plan, they pay just one monthly payment and have MMI pay their credit cards monthly on their behalf. This will allow them to get the account paid off and amortized in five years or less. “They pay us, then we pay their creditors,” Rivero explains. “The benefit is that they receive a reduced interest rate, the convenience of having only one payment to make, and major cost savings. They could save thousands of dollars throughout the course of their debt management plan.”

Other credit counseling and repair businesses with active licenses in Alaska include Farmakis Credit Repair, Pioneer Credit Counseling, and DebtWave Credit Counseling, according to October 15 database results of the Division of Corporations, Business, and Professional Licensing.

In addition to working with a professional credit repair business, there are many credit-improvement strategies consumers can implement themselves. In fact, do-it-yourself credit repair is something that every person needs to explore, Rivero says. There’s too much information available for consumers not to attempt some type of self-repair. Then if they need assistance, they can always solicit professional help. “If you don’t have the time to repair your own credit, then reach out to a nonprofit organization,” he says. “I would start there.”

There are also a variety of online resources that can facilitate credit improvement. For example, Capital One, Discover, and American Express provide credit monitoring services for their customers. Mint.com allows people to aggregate their accounts, develop a budget, and get a better handle on their finances. And Credit Karma offers free credit scores, monitoring, and insights, as well as handy loan, amortization, and debt repayment calculators. However, consumers should be aware that Credit Karma uses the VantageScore 3.0 model, which doesn’t generate industry-specific scores. It only calculates base scores. “The problem is that sometimes your score might look a little higher [with Credit Karma]; it’s a very ‘sunny-day’ kind of scoring,” Rivero says.

Like Rivero, Rostamian feels that most people are capable of improving their own credit. The first step he recommends is to find out what’s being reported on the credit report and going from there. “Sometimes improving credit can be as simple as paying down a balance or removing a negative item,” he says. “I would recommend they sign up with NerdWallet or Credit Sesame.”

NerdWallet promotes itself as a source of “objective advice, expert information, and helpful tools.” It strives to help users make better financial decisions in banking, investing, credit cards, mortgages, loans, insurance, and other areas. Credit Sesame is a platform with various tools designed to help consumers improve their credit health to create better opportunities for themselves and their families.

Another important credit score-boosting tactic is to add accounts. Adding positive entries not only can build a positive credit history but can also help nullify negative items. Another effective but often overlooked strategy is to place the consumer as an authorized user on someone else’s account. “If somebody adds you as an authorized user on their credit card, it’s going to be reported on your credit,” Rostamian says. “Even if they pay late on their account, it will never be reported on the authorized user’s credit. But if you have high balances, you don’t want to add another person as an authorized user because it can affect their credit.”

However, Rostamian says, most people who handle their own credit repair don’t do so effectively because of the many ins and outs involved. But if consumers want to avoid the complex intricacies, they can work with an established company—preferably, one that charges lower fees. Credit Monkey, which maintains an office in Fairbanks, is a viable option. “Most people charge thousands of dollars,” Rostamian says. “We charge $99 monthly or more depending on how many issues people have affecting their credit. Our goal is to help people in all fifty states.”

Most people have numerous derogatory items on their credit report, so Credit Monkey focuses on addressing these negative issues. It has a direct connection with all three credit bureaus and is the first and only company that conducts disputes directly and electronically, according to Rostamian. In addition to challenging negative items, Credit Monkey also adds positive accounts to the credit report. In fact, the company sets customers up with at least five positive credit accounts with entities such as Self Lender, My Jewelers Club, and First Access Visa. “Within the first sixty to ninety days, we get most things resolved,” Rostamian says. “But it can take twelve months to repair someone’s credit.”

Like many financial experts, Shockley is a big proponent of consumers equipping themselves with knowledge so they can successfully enhance their credit. He explains: “There are a lot of adults out there who have not had a lot of exposure to financial education or the guidance necessary to truly understand their credit. Awareness and basic education are absolutely a need across the board.”

People need to contemplate what their specific goals are, their spending necessities, and how they will track their credit and spending. From there, they need to implement an ongoing monitoring plan to ensure their credit history is spotless. “A good credit history doesn’t get built over night,” Shockley says. “However, a few derogatory items can have a quick and devastating effect. But having text and mobile alerts set up so you are aware when a bill is due or your cash flow is running low can go a long way toward helping you maintain good credit.”

Wells Fargo has a number of online resources available to help consumers and businesses manage their credit. For example, mobile and text banking alerts can remind people that a bill is coming due and update them about their checking account. The Wells Fargo Smarter Credit Center and Business Credit Center, which can be found on the Wells Fargo Works for Small Business website, offers resources for everyone. Consumers can use the Smarter Credit Center to explore the many aspects of improving and rebuilding credit. The Business Credit Center offers an informative fact sheet with tips to help small business owners improve their creditworthiness.

“Educational tools are great for supporting self-discovery and self-direction with credit improvement. But having a partner to help distill information and pinpoint what will be the most useful is an invaluable piece,” Shockley says. “You are able to do it on your own,” he says, “but if you’re looking for a way to have sustainable success, that partnership is absolutely crucial.”

Credit reporting agencies also offer tools to help individuals better manage their credit. Consumers can request a free copy of their credit report every twelve months from Equifax, Experian, and TransUnion by visiting annualcreditreport.com. Or they can order a free report directly from each of the credit bureaus’ websites. At Equifax.com, they can enroll in Core Credit for a free monthly Equifax credit report and VantageScore credit score. Similarly, Experian.com provides a free credit report with its CreditWorks basic account.

Consumers can also pay to receive their FICO score and a host of credit-enhancing services. Experian, for instance, charges up to $25 a month for access to three-bureau FICO scores, credit monitoring, fraud resolution, identity theft monitoring, and other services.

While most credit repair solutions focus on consumers, they also recommend some basic tactics that business owners can use to enhance their company’s credit history. First, it’s important to understand that business and personal credit are inherently separate records and are treated differently, according to Rivero. For example, individuals normally have more federally-guaranteed rights to correct their credit than businesses. Case in point: consumers have the legal right to get one free credit report per year, but companies have to pay $39 for an Experian CreditScore report.

Credit repair experts offer a plethora of general advice to help consumers build and repair their credit. Rivero encourages people to do their own research and become better informed about what affects their credit history. And if they need help with more complex issues, they can reach out to a nonprofit counseling agency. “If you can’t find one, consult with the National Foundation for Credit Counseling,” he says.

Rostamian of Credit Monkey condenses his advice down to two key areas, saying: “Just make sure to have less debt ratio, and don’t be late on any payments. Once you’re late, it really starts to affect your credit.”

Wells Fargo’s Shockley focuses on three main points: educate, plan, and monitor. He elaborates: “That education starts with knowing yourself, your habits, your goals, and what tools and resources are out there. Then you can create a plan that is suited to your goals. You can then monitor that plan to make sure it is working for you.”