If you’re in the market for a house or car loan, or applying for business financing, chances are your credit score must be as high as possible. To do so, credit repair services provide valuable assistance. In short, credit repair involves companies trying to remove inaccurate information from your credit reports in exchange for payment; but it should be remembered that these companies can’t do anything that you couldn’t already do yourself.
Credit repair involves reviewing your reports and disputing errors by filing complaints with credit bureaus (Experian, Equifax and TransUnion) or creditors that supply data to these agencies. Some services also provide coaching and guidance as part of their services for fixing credit; these might include teaching you how to dispute yourself any mistakes on your reports as well as helping navigate this complex process.
Before standardized credit reporting was instituted in 1970, local agencies kept profiles on individuals to help lenders assess their risks when lending out loans. These reports, known as “credit files,” included information such as your name, address, employment history and credit usage. Following regulation in this area in 1970 with the Fair Credit Reporting Act’s implementation to protect consumers’ rights and ensure accurate reports – people began hiring credit repair agencies to have incorrect details removed from their files.
Credit repair agencies work by obtaining current copies of your reports from Experian, TransUnion, and Equifax and reviewing them for inaccurate entries such as late payments, outstanding debts or inquiries from unaccredited lenders. They then contact credit bureaus and creditors on your behalf in order to request correction of errors or removal of inaccurate items from your report. Some credit repair services charge an initial setup fee before charging ongoing monthly maintenance fees to maintain your report while continuing dispute processes.
Some credit repair companies can do more than address errors on your reports by teaching better financial habits, including using auto-pay online services for regular bills and not applying for new credit. They will tailor their advice specifically for your situation and goals.
Before signing any credit repair service contract, be sure to research its history with both the Better Business Bureau and Consumer Financial Protection Bureau. Under the Credit Repair Organizations Act, no upfront payments should be demanded; rather, an exhaustive written contract detailing exactly which services you’re purchasing should be presented; it should also detail estimated completion time frames as well as guarantees provided with each service; cancellations without penalty should also be allowed within three days.
