Credit repair businesses must abide by multiple federal laws designed to safeguard consumers against any unsavory practices, as well as provide clear disclosure regarding fees and services offered.
Credit repair firms take the hard work out of rebuilding your credit by pulling your reports and disputing errors directly with credit bureaus (Experian, Equifax and TransUnion) and creditors. Their goal is to remove inaccuracies from your report so as to increase your FICO score; some firms might also add positive items in an effort to further boost it; furthermore they provide personal finance advice and tools which may assist in building healthy credit in the future.
Before selecting a credit repair service, ensure the firm is accredited with the Better Business Bureau and holds an A+ rating and low consumer complaints. Inquire if they offer money-back guarantees and the number of disputes it submits on your behalf each month. Additionally, some firms might recommend opening new accounts in an attempt to boost your score; this could backfire should any future difficulty managing credit arises.
Reputable credit repair companies will start by asking you to sign a contract that gives them limited power of attorney, meaning they can only dispute inaccurate information with credit bureaus and creditors on your behalf. After signing, they’ll explain more fully their process while answering any queries you might have. If you’re uncertain about their service, it may be beneficial if it offers the option for online subscription pause – this way you won’t incur monthly charges as your credit improves.
The top credit repair companies work closely with you to understand which errors are impacting your score, then use their connections with credit bureaus and creditors to get them removed from your report – this may involve writing letters or submitting requests to verify information.
Once upon a time, some unscrupulous credit repair companies employed tactics like file segregation to manipulate customers’ credit. This involves creating an IRS Employer Identification Number that contains numbers similar to your Social Security number and telling you to apply for new credit using it; ultimately creating an entirely new history based on this number. Unfortunately, this practice was both illegal and rarely effective.
As you compare credit repair companies, it’s essential that you compare their upfront and monthly charges, the number of items they can dispute each month, educational resources and personal finance tools they may offer as perks and any lawsuits filed against the firm; online consumer reviews; check whether any lawsuits were filed against it; any history of unsavory practices should be avoided at all costs and the Consumer Financial Protection Bureau complaint database can provide invaluable insight into legitimacy of credit repair services.
