Credit repair might be your only financial option at this point, and making the decision to fix your financial situation is always the first step toward improving your financial life. If you’ve worked hard to make sure your financial situation is in good standing, worked to make sure you can afford your bills and handle your payments, and you’re still not seeing an improvement in your credit score, you might need credit repair services to help you out. It’s a last-resort option for many, but it can be beneficial.
When most people refer to credit repair services, they are referring to a situation in which you hire a company to handle your credit issues for you. This is a company that reaches out to your creditors and your credit bureau to help you fix your report and raise your credit score. It’s time-consuming, but it might work for you if you have negative items on your credit report whether they are incorrect or simply too old to be there. What is credit repair, how can you make it work for you, and is it worth your time?
What Is Credit Repair?
Credit repair is the simple act of fixing your credit score by having items removed from your credit report. You can hire a company to do this for you, but you can also do it yourself. Anyone who has inaccurate information on their credit report is free to contact each of the three major credit bureaus to ask that the incorrect information is removed. It’s called a dispute, and it’s free of charge.
It’s illegal for a credit repair agency to dispute information that is accurate and correct, but it’s possible to do it. Many people will even do this themselves in hopes that they can have items removed from their credit report that drag down their score.
Here’s How it Works
Credit repair works simply. You can dispute information on your credit report. You can do this by writing a letter or filling out a form online to do this for you. You should have evidence that the debtor information is incorrect. Card statements, copies of your information or correspondence with a creditor, and other proof is required.
Once you or a credit repair company disputes the debts, the credit bureau reaches out to the creditor. If the creditor does not respond in 30 days, the item is automatically removed from your credit report. The creditor can respond within the 30 day period stating that your dispute is correct, or they can state that they believe they are right and ask that the credit bureau keep the item on the report. If they do this, you will need to present all that proof to help your own case.
If negative or incorrect items are removed from your credit report, your credit score may rise. It’s a chance you can take to repair your credit, but you must be certain the information on the report is inaccurate. Disputing accurate information goes against federal laws. For example, you can ask that an old defaulted account is removed from your credit report after seven years. If the company doesn’t remove the negative information seven years from the date you first defaulted, you can dispute it and have it removed yourself.
You can handle your own credit repair, but it’s an intimidating process for many people. This is where a credit repair company can benefit your financial future. Finding the right credit repair company is easy if you know what to look for and what to avoid.
Look for Free Consultations
If you’re looking for a great credit repair service with a good reputation, try one that offers a free consultation. It’s often a sign of a good company that’s willing to work with you to make sure you’re getting the best results for your money. They won’t charge you for this consultation, and that’s what you want.
Look for Companies that Have Been Around
Don’t look for a company that’s only been around a few months. You want one that has a long history in the credit repair and financial game. You need someone who knows how to get things done correctly on the first try, and you must have a company that’s advocating for you every time they go to work.
Look for a Good Reputation
Check with the Better Business Bureau and look online at the company’s reputation. If you find more negative comments and remarks than positive, you might consider looking elsewhere. It’s not always easy to know when a bad comment is realistic, but it’s helpful to look into them, taking the reviews with a grain of salt.
Look for an On-Staff Attorney
If a credit repair company has an attorney on staff, that’s a good sign. They’re willing to make sure their work is being done above the legal line, and it’s a good indication that they don’t skirt the rules. You don’t want to end up in legal trouble because you worked with an disreputable company.
Check with the CFPB
You can look up the Consumer Financial Protection Bureau complaints board online to see if the credit repair company with which you are working has any complaints. No company is perfect, but you’re looking for major complaints, numerous complaints, and verified complaints. A reputable company will not have these complaints, or they will have already disproven them and had them handled.
Red Flags and Things to Know
When searching for the right credit repair company, you should look for red flags in addition to good ratings. Red flags can appear when you least expect them, and they are often the little things you need to look out for when speaking with someone from a credit repair company that looks great on paper.
Quick Fix Promises
You cannot repair your credit score in no time at all. There is not a magic button you can use to make this happen, and that’s all there is to it. If a company promises you a quick fix, it’s too good to be true. A good credit repair company will tell you upfront that you can fix mistakes, but you won’t get a magic result.
Upfront Payment Demands
Run, don’t walk, away from any credit repair company that demands you pay them up front for their services. You should not be asked to pay anything up front. This is illegal per the Credit Repair Organization Act (CROA). If someone is violating this protocol, it’s up to you to report them and walk away before you get burned.
You want a contract anytime you work on your finances. If you don’t have a contract to sign, walk away. Find a company that requires you to sign a contract. This protects you, and it protects them. If a company isn’t concerned about protecting itself, you are looking at one of the biggest red flags in the financial industry.
Suggests Illegal Activity
The biggest red flag to look for when you are working with a credit repair company is any suggestion they can remove accurate and honest items from your credit report. Sure, you’d love to have those defaulted credit card accounts removed from your credit report, but you cannot do that if they are honest and they are legal. If a company suggests they can do this for you, they are working illegally.
Any Kind of Guarantee
There is no one who can guarantee they can repair your credit score and fix it for good. They can try to help you raise your score by removing negative items from your credit report, but there is no guarantee it will work. If a company offers you a guarantee that they can raise your score, you need to walk away. They could be working illegally, and you want no part in that.
Offers to Create a Parallel Identity
If a company tells you they can give you good credit by creating a business credit profile, you are not interested. This is an illegal practice, and it’s not something a reputable company offers. Do not allow a company to create a new credit profile for you even if they offer. They are not legally able to do this, and working with them is not good news.
The simple truth is that there is no quick fix or simple solution to credit repair. You can do it yourself, but you can also hire a company to do it for you. You should never pay upfront or be asked to provide any illegal information. You should not allow the company to remove honest and accurate items from your credit report, and you should never start a new credit profile. Do not hire the first credit repair company you come across, either. Your job is to find the one that you can afford, the one that works legally and for you, and the one that will save you the most money.