Credit repair companies are an increasingly popular choice among consumers with poor credit who need to improve their score before applying for mortgage or loan products. While credit repair companies may provide assistance, it is essential that consumers understand exactly what services are being provided before hiring one and are able to find ways to clean up their own credit without incurring fees from these services.
Credit repair reports provide an in-depth examination of your credit history, detailing balances, past due accounts, public records and any legal action taken against your name. Experian, Equifax and TransUnion each offer such reports to individuals looking to improve their score.
At least once annually, you can get a free credit report from each major credit reporting agency by visiting their websites or calling them directly. However, if you hire a credit repair service provider they may charge a fee to pull your report and start disputing any errors found.
Once you sign a contract with a credit repair company, they’ll start work for you immediately. They typically pull reports from all three major bureaus and review them to identify any discrepancies which need disputing, such as bankruptcies, foreclosures that don’t belong to you, debts paid off in full and inaccurate personal information such as names or addresses that no longer apply.
Once a credit repair company discovers errors in your report, they will notify the credit bureaus and data furnishers to have these items corrected. Each credit bureau then has 30 days to investigate and decide whether any items need to be deleted or altered before sending back any updated reports to their owner. When dealing with credit repair companies they provide updates regularly as well as copies of updated reports with any updates to individual disputes that they deem important to remove from your report.
Some credit repair companies also recommend adding positive information to your report. They may suggest applying for new credit cards or loans to improve activity on your report, and note that credit should only be applied for when necessary and you can pay it back promptly.
The Consumer Financial Protection Bureau advises consumers to use extreme caution when selecting a credit repair company and look out for potential red flags, such as companies demanding upfront payment or making overly optimistic claims.
Though credit repair companies may provide some assistance, you will often achieve more rapid results by following these steps on your own:
If there are errors on your credit report, don’t forget that disputing them yourself for free can be done easily and effortlessly. Simply visit any one of the three credit bureaus’ websites where there will be instructions and links to file disputes against errors on your report; or use an app specifically designed to help identify and dispute errors on it.
