How to Know When to Repair Credit
When to Repair Credit
In theory, a credit repair company can help you fix errors in your credit report that may be negatively impacting your score. However, consumers who are willing to put in the time and effort required to do their own credit repair can typically achieve the same results for less money. If you are considering hiring a credit repair service, be sure to choose wisely by researching companies carefully. Look for one that offers clear, up-front information about fees and pricing structure. Avoid companies that demand payment upfront or make promises that sound too good to be true. Also beware of any companies that advise you to take illegal actions such as creating a new credit identity, since doing so could subject you to fraud and other consequences.
Most credit repair companies do two things: dispute errors and try to get accurate negative information removed from a consumer’s credit reports. Disputes are usually made by sending a letter to the credit bureau asking them to investigate a specific piece of information that is questionable or inaccurate. The credit bureaus are then required to contact the creditor who provided that information to verify its accuracy. If the creditor can’t or won’t provide proof that the information is correct, it must remove it from your report. Credit Repair services often send these letters on behalf of consumers and follow up with them if they don’t hear back from the credit bureau or the creditor within 30 days.
If you’re trying to remove inaccurate or erroneous items from your credit report, it shouldn’t take long to see a positive change in your credit score. However, if you’re struggling with delinquent accounts or other negative marks that aren’t being removed from your report even after several months of on-time payments, it may take much longer to see any positive impact on your credit score.
How to Know When to Repair Credit
Negative items in your credit history tend to stick around for seven and a half years, so it will take time to erase them from your record if you miss a few payments or let your debts slip into collection. In addition, some types of negative marks are more serious than others in affecting your credit scores, such as “credit utilization” (the size of your total debt relative to your available credit) and late payments.
While a good credit score won’t necessarily save you money on loans, it can lower the interest rates that you pay and make getting loans easier. If you’re having trouble obtaining financing because of bad credit, consider seeking the help of a reputable credit repair company or a non-profit credit counselor.
If you decide to hire a credit repair company, be sure that the company you choose follows the rules of the Credit Repair Organizations Act. The CROA prohibits credit repair companies from charging you until their work is complete and the results are clearly explained to you. Be especially careful to steer clear of any companies that recommend illegal tactics, such as presenting yourself as someone else, since this can be considered mail or wire fraud and could result in criminal charges against you.