If you have had an unfortunate financial experience or find yourself saddled with debt, credit repair may seem like the perfect way out. Unfortunately, however, what constitutes credit repair depends upon which company is chosen – many charge fees that put you further in debt than before!
Credit repair companies typically work by reviewing your credit reports and identifying inaccurate or derogatory items that they contact the credit bureaus and data furnishers to dispute. They then work to improve your score as well as offer recommendations to enhance financial wellbeing.
Some companies provide additional services, like writing cease and desist letters to debt collectors or helping you apply for mortgage preapprovals. These extra services often come as part of a package upgrade but can cost more than purchasing them individually.
The Federal Trade Commission regulates credit repair companies, and you should only work with legitimate agencies that follow Credit Repair Organization Act regulations (CROA). They must provide an agency contract which clearly details services performed, timeframe for expected results and any guarantees provided as well as notifying you of your rights under CROA; note you have three days without incurring penalties to cancel the agreement if necessary.
One of the biggest difficulties associated with credit repair is that no company can promise they’ll remove accurate, negative information from your report. If a company guarantees this will happen, they could be violating CROA and should be avoided.
A legitimate credit repair agency should conduct a detailed examination of your credit report, identifying errors and following up with credit bureaus and data furnishers to investigate disputed items. Furthermore, they’ll provide you with a plan of action as well as estimated costs of their services.
Some reputable credit repair services may include legal action as part of their credit repair services, such as sending letters of protest to debt collectors or even attending court in certain instances. It is important to remember, however, that this process cannot be managed on its own and it usually doesn’t justify spending extra on legal action.
At the end of the day, there’s nothing that a credit repair agency can offer that you couldn’t do yourself. Although repairing your own credit takes longer and costs significantly less than hiring one of these agencies, taking this route can secure higher scores and more secure financial futures for yourself. For those unwilling to devote the necessary time and energy toward this journey alone should carefully evaluate any claims from credit repair agencies regarding what they can provide as they might consider alternative solutions instead.
