(MONEY Magazine) – REJECTED AGAIN? asked the ad for Credit Rite, a firm that offered customers a ''guarantee'' to clean their smudged credit records. Three officers of Credit Rite recently began serving jail terms, but assistant U.S. attorney Arthur Zucker in Newark, N.J., who helped prosecute them, says consumers still need to be on the lookout for rip-offs by similar self-styled ''credit repair'' companies. These firms -- not to be confused with legitimate credit counseling services -- can be spotted by unrealistic promises that you won't be turned down for credit again or that they will purge all delinquencies from your record. They can also be distinguished by their fees, which range up to $1,500 as opposed to about $10 for a nonprofit credit counselor. What the credit repairmen generally do is invoke a federal rule that allows consumers to protest items in their records. Since a credit bureau must reverify any disputed item within a ''reasonable'' time (usually 30 days) or else delete it, the repair company floods the bureau with challenges, expecting that some, at least, can't be answered quickly and will thus be dropped. This works only temporarily, though, since once a creditor proves his bill is correct, it goes right back on your tab. But don't count on a refund from your credit-repair firm. ''Within the first year, perhaps half of all the new ones move or go out of business,'' says Jean Noonan, associate director of the Bureau of Consumer Protection. Instead of hiring a fly-by-night outfit, check your record yourself. Ask the credit division of a bank or department store which credit bureaus or reporting agencies cover your area (there may be several). Then phone or write them directly for a copy of your file. You can get it free if you were denied credit within the past 30 days owing to the agency's information; otherwise, there is a fee of $10 or so. If you prove errors, complain in writing and the credit bureau must correct the mistake at no charge. As for help in managing your debts, contact the National Foundation for Consumer Credit (8701 Georgia Ave., Silver Spring, Md. 20910; 301-589-5600) to find out which of the nation's 380 nonprofit credit counseling services is nearest you.