Making sure your credit is healthy and free of errors.
There are several credit services that you might hear about that all do the same thing. “Credit repair,” and “credit correction,” are the exact same service – companies just call it different things because the most common name has a bit of a bad reputation. But they all boil down to one simple idea…
If you correct mistakes that often appear on your credit report, you can actually improve your credit score.
That’s what credit repair services (or similar services by different names) do. They review your credit reports, identify errors and then do the legwork to dispute those errors with the credit bureaus. And this is a legitimate (and often extremely useful) service, so not all credit repair companies are scammers. You just have to be able to tell what’s real from fraud.
So really, what is a credit repair service and what do they do?
Why you need to correct your credit report
A credit report is a living history of your credit usage. Each credit bureau (Experian, Equifax, TransUnion) maintains its own version of your credit file.
You’d expect or at least hope that the credit bureaus could maintain accurate records – and you’d be wrong. According to study from Experian…
- 1 in 4 contain an error that would negatively impact a consumer’s credit score
- 1 in 20 contain an error that’s bad enough to decrease a consumer’s credit score by 25 points or more
Fact: The study found 79% of all reports contain some kind of error, but often these errors aren’t credit-damaging.
If your credit score were to be decreased by 25 points or more, that’s enough to bump you down from good credit to average credit. This means it’s tougher to qualify for advertised interest rates, so you wind up paying more over the life of your loans and lines of credit.
How does credit repair help correct these mistakes
With credit repair, you identify mistakes, errors or discrepancies that you find when you review your reports. Then you dispute those mistakes with each of the three main credit bureaus. Yes – you have to make disputes with each bureau individually.
Once you’ve made a dispute, the bureau reviews any information you provided and notifies the creditor, who has an opportunity to respond. If the information is wrong (i.e. it can be verified) then that remark must be updated or removed from your report.
Once you’ve made a dispute, how long does the creditor have to respond?
a) 14 days
b) 30 days
c) 60 days
d) 90 days
If the creditor does not respond within 30 days, then the information must be removed from your credit report.
b) 30 days
Of course, disputes can also be rejected, which means the information remains even if it’s false. This can cause problems if you’re trying to maximize your credit score to get a new loan like your mortgage. Dispute letters have to be written a certain way if you want to be successful and have the mistakes removed.
Why credit repair services can be worth the cost
Without a doubt, credit repair is something you can do on your own.
But if you have a large amount of disputes you need to make and you want your reports to be completely error-free because you’re apply for a loan or a new line of credit, then it’s in your best interest to make sure the process is done as well as possible.
This is where a credit repair service comes in handy, because they know how to make disputes the right way. You have a better chance of being successful, which is what you need if you want to do the most for your finances. It also saves you the time and hassle of doing the work yourself.