News & Advice

Credit repair – How do you know which credit repair service is right for you?

December 2, 2019

Credit is a crucial part of your financial power, or your ability to access goods or services now with the promise to pay later. The most significant indicator of your credit is your credit score, a three-digit number based on your financial track record that tells lenders how likely you are to pay back a loan. Credit scores are primarily based on credit reports, compiled by three independent credit bureaus – Experian, TransUnion and Equifax – who use information about your borrowing and repayment past that is voluntarily provided by creditors. Good credit is essentially necessary in order to secure a loan to purchase a home. But what do you do if your credit is less than ideal?

People with bad credit often turn to credit repair services for assistance. While these services can be a valuable resource for remedying bad credit, there are things you should know when determining which repair service to work with. Read on to learn what exactly credit repair services do, what to watch out for when selecting a credit repair service and some alternatives to repair services.

What do credit repair services do? What are some red flags?

Credit repair services will review your credit reports looking for errors and negative items. Then they will submit requests on your behalf to remove errors as well as negotiating with creditors to resolve any outstanding disputes or negative items. Importantly, credit repair companies cannot do anything you can’t do yourself. People opt to work with credit repair companies as a way to outsource the labor needed for credit repair, but there is no silver bullet. Credit repair is a process and it can take months, even years, before you really reap the benefits – any company that promises you quick fixes should be avoided altogether. Here are some more red flags:

  • Credit repair companies that ask for an upfront payment – this practice was banned by the 1996 Federal Credit Repair Organizations Act. Any company requesting a payment before services should not be trusted.
  • Companies that don’t provide contracts – it should be crystal clear and in writing what services they are offering and what you agree to pay upon delivery of those services.
  • Companies that promise or suggest they can remove something accurate and negative – no one can do this, not you and not a credit repair service.
  • Companies that ask you to lie or suggest creating a parallel identity – this is quite simply fraud and you should run the other way from any company that conspires to commit fraud.

How do you know you’re working with a good credit repair company?

Signs of a reputable credit repair service include the following:

  • Free consultations
  • Documented track record of successfully helping people repair their credit
  • Warranties stating they will not charge if they can’t remove a certain number of items

Credit repair service alternatives

Before opting to hire credit repair services, you should also explore alternatives. Specifically you should check out nonprofit credit counseling services. For free or a small fee, these services will teach you how to dispute errors, how to handle identity theft and credit card fraud, how to budget and offer strategies to improve your credit score in the long-term. Sometimes they will even work with you on a debt management plan, a payment agreement between yourself and your creditors.

Bottom line: Do your research!

Your credit is arguably the most important aspect of your financial power and there are ways to fix bad credit. But, as with anything, always do your research. Explore your options, whether that be credit repair or credit counseling, and remember that if anything sounds too good to be true, it almost always is.

Comments
  1. Interesting article. I really like the topic that how can i know the good reputed credit repair company.

  2. I agree that Research is the best way to find out the right credit repair company . Because i prefer to search through self research and make my own decision. Overall very informative article.

  3. Drew James says:

    Thank you so much setschedule . I know that this process 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 consumer profiles and i think also that If a company asks for fees upfront or makes outrageous promises, the company is most likely a scam.

  4. jhon keith says:

    Every Point are good and valuable . I prefer to do make research carefully and my greatness ” Protect yourself and your credit”

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