Credit repair is a service provided by credit repair companies that helps consumers dispute and remove negative items on their reports. These services can be an effective way to boost your credit score.
They provide credit education and help you understand the credit reporting system. However, it’s essential to remember that credit repair isn’t a quick fix; it could take up to three months or longer before any improvements appear on your report.
Credit repair companies provide a range of services that can help you improve your credit. These include debt validation letters, monitoring services and identity theft protection. Some even provide debt settlement or counseling.
Debt settlement involves paying less to creditors than what you owe. While this could have an adverse effect on your credit score, debt settlement may be the best solution for those facing severe financial troubles.
Credit counseling involves working one-on-one with a credit counselor to create an action plan for improving your financial situation. They can enroll you in a debt management plan, negotiate with creditors and help build up your credit over time.
Credit repair services can be plentiful, but not all companies offering them are reliable or possess the experience or expertise to successfully resolve your credit issues. In fact, some of these businesses may do more harm than good.
The initial step in any credit repair process is reviewing your credit report for errors and negative information. Typically, these companies will contact the three credit bureaus to obtain your current report and search for negative marks such as bankruptcies, charge-offs, tax liens or other derogatory records.
Once they have your reports, the company will identify the most damaging items on your credit report and devise a strategy to dispute these with the bureaus. They will send out letters disputing these items on your report and attempt to negotiate a resolution with them that removes these from your record.
You can dispute inaccurate information at no cost through Experian, Equifax and TransUnion; however this process may take a considerable amount of time. A credit repair company can expedite the dispute and negotiation process by directly contacting the credit bureaus on your behalf.
Some credit repair companies provide free consultations and personal finance advice to guide you through the process. This can be especially helpful if you’re new to credit.
The best credit repair companies have been around for five or more years and have a well-earned reputation of helping consumers improve their scores. These firms typically provide free education on finances as well as helpful consumer advice, plus a 90 day money-back guarantee.
Most credit repair companies require a setup or first work fee before they start working on your credit. This fee is usually one-time and not required by law and can range anywhere from $15 to $200.
When selecting a credit repair company, you should compare their prices, upfront and monthly fees, the number of items disputed each month and any extras such as debt validation letters or identity theft protection. Furthermore, read customer reviews to gain insight into other customers’ experiences with the firm.
