Use this guide to find out what credit repair companies do for consumers.
When a credit repair company begins working for you, they immediately pull your credit report from all three credit bureaus (Equifax, Experian, and TransUnion). The team reviews your reports to identify potential mistakes and errors. This can take a few days to complete, as they look for things like mistakes in the credit history, duplicate accounts and expired negative items that should no longer appear.
If they identify errors on any of your reports, they’ll collect any documentation that you have, which will support your dispute. Once they have the documentation, they send it to the three bureaus and work with them to determine if the item or items should be removed from your credit report.
The best credit repair companies review all three reports from the different bureaus because they might not all contain the same information. Each credit reporting agency has its own “data furnishers.” That’s what many industry experts call banks, credit unions, savings and loan institutions, mortgage lenders, and credit card issuers. So, if each report is not reviewed, errors could be missed.
To be clear, there’s nothing that credit repair companies do that you can’t do on your own. Everything a credit repair company can do for you, you can do yourself for free. However, doing the work on your own can be a lot of work. You also may not have as much success making disputes yourself, which means negative information may remain and continue impacting your score. Going through a professional credit repair service often increases your chances for success.
Can a Credit Repair Company Really Help?
In a word, yes. They employ a staff of attorneys that are licensed to work in all states or only provide services in one state. These attorneys understand the nuances of the trade and the law. Their experience makes them more effective when they’re negotiating with your lenders on your behalf. They also apply the provisions within federal consumer protection laws to help you improve your credit history.
The top credit repair company will help you to:
- Comprehend and evaluate your credit reports
- Understand how your credit scores are determined
- Identify strategies that will continually boost your credit standing
But let’s make one thing clear, credit repair may or may not improve your credit score. You hire these companies with the idea that they will delete any mistakes on your credit report. And, unfortunately, mistakes can be rampant.
A congressionally mandated study found that one in five consumers had an error on at least one of their three credit reports. Howard Shelanski, Director of the Federal Trade Commission’s Bureau of Economics, says:
“These are eye-opening numbers for American consumers. The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
The study also found that one-in-four consumers found errors that could negatively impact their credit score.
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Legitimate Credit Repair Companies
You may have decided that you’d rather employ a credit repair company instead of taking the free credit repair option and doing all the work yourself. But you have questions – almost every person does. For instance, how can you tell if a business is legitimate or some front for a scam artist? And, are the services affordable? Let’s find out.
5 Things the Best Credit Repair Companies Won’t Do
There are certain things you should be looking for when investigating credit repair companies and scammers. Legitimate companies won’t do the following five things:
- Ask you for payment upfront before they start any work for you
- Request that you don’t contact the credit reporting companies directly
- Advise you to dispute information that’s accurate in your credit report
- Tell you to provide phony information on your applications for credit or a loan
- Forget to review your legal rights when they explain their services
If you recognize these red flags, or if the company promises that it can increase your credit score by 100 points or more, they’re running a scam. If you spot a scam, you can report it to the State Attorney General or the Federal Trade Commission.
Here’s a quick fact for you: The Better Business Bureau rarely accredits credit repair companies due to concerns of the high instance of fraud in the industry. Only the best gets the BBB seal of approval.
How Much do Credit Repair Companies Charge?
The rate a credit company charges really depends on the services you require or request. Some of the services provided in a comprehensive program may include:
- 3-bureau credit monitoring
- Fraud protection and alerts
- Credit score monitoring and alerts
- Credit score simulators and credit coaching
- Housing counseling and mortgage lender referral
- ID theft insurance
- Financial coaching and education
For this package you could be paying anywhere from only $30-$100 a month, with a setup fee ranging from $15-$90. The cheapest credit repair cost occurs when you fix your credit yourself. That option costs around $30 – but you do all the time-consuming work yourself.
Software for guidance on credit repair begins at $30 – but you don’t get much for your money. More comprehensive software packages range from $199-$399 – these platforms often set alerts to track dispute progress and sometimes lead you to certain templates to use; they can even autofill those templates in some cases.
Before you sign anything or buy anything, read the contract and ask questions about the rates and services. Offers that sound too good, are usually trouble.
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Protect Yourself and Your Credit!
Getting your credit report and checking it for errors should be on your “to do” list. If you don’t, these errors could stay on for years and lower your credit score. This will make getting loans or a credit card with affordable rates nearly impossible. And now that you know how to spot a legitimate credit repair company from a scam, don’t hesitate any longer – contact a credit repair company today. They could make the difference between a healthy credit history and one plagued with negative information.
More Questions about Credit Repair Companies
Is credit repair legitimate?
Credit repair is legal in all 50 states. The Fair Credit Reporting Act protects the right of every consumer to ensure the accuracy of the information shown in their credit profile. But that doesn’t mean all credit repair companies are legitimate. Legitimate companies only charge for credit repair services after they have been performed. If a company asks for fees up front, or makes outrageous promises, they are most likely a scam.
How long will it take to repair my credit history?
It’s essential to remember that credit repair is frequently the first step in the process when you want to build your way to a better credit standing and score. The repair process takes approximately 3-6 months, but the time it takes to rebuild your credit score can take longer depending on the errors and your past credit history.
Do credit repair companies work?
A legitimate credit repair company does remove negative items from your credit report and help improve your credit standing, making it easier to obtain a mortgage, car loans, credit cards or insurance. Don’t trust a company that promises to raise your credit score by 100 points or more. It’s a scan and won’t work.
Article last modified on February 25, 2019. Published by Debt.com, LLC .