How Do Credit Repair Companies Work?

If you have bad credit, it’s no surprise you’re looking for a way to repair your credit score. While there are several options to choose from to make this happen, one of the most common resources is to hire a credit repair company.

Perhaps you need to raise your credit score but aren’t sure how to go about it. Maybe you want some advice on which companies are the best. We will discuss why credit repair is important and provide you with some helpful tips on choosing the best company around.

Why is Credit Repair so Important?

When you have debts, and they aren’t paid off in a certain time frame, this results in bad credit. Buying a car, a home, applying for a credit card, qualifying for a personal loan, or other purchases might be impossible due to your credit score. When you have good credit, you have more financial freedom, but with a bad score, your finances will hold you back.

For these reasons, many people decide to seek help through professional companies.

What to Credit Repair Companies Do?

These organizations are third party contributors that work to alleviate the pressure building on your credit by attempting to remove offenses from your report.

How does this happen? These companies communicate with debtors, such as credit card issuers or banks, to modify a report so that invalid information is taken off or so that a report reads more in your favor.

How Do They Work?

Most companies will begin by requesting a copy of your credit report from a bureau. After reviewing the report to see what terms they can negotiate, they will create a plan to convince debtors to withdraw as many offenses from your report as possible.

This may take some time seeing as both parties must come to an “agreement.” For example, if a company sends letters to a bureau to discuss your credit history, it could take a while for both parties to find common ground and reach a decision.

Benefits of Credit Repair Companies

The greatest advantage of hiring a credit repair company is that they handle the hassle. Many times if someone tries to do this on their own, they encounter mishaps and it’s difficult to remedy issues without professional help.

While it is possible to handle this repair on your own, a trustworthy company will take care of the calculations, review information, and contact debtors so you don’t have to devote your time to this process.

Most companies will offer either an online medium or mobile app where you can track what is taking place. It is always better when browsing for a company to find one that offers this access so you can log in and see the process for yourself.

What to Look Out For

When you hire any company or service, there is always a chance that the work will not be done acceptably. You might run into scams or lazy companies that just want to make quick cash.

How do you avoid scams? Here are a few ways you can know if a company is trustworthy:

1. Never pay upfront

If a company asks you to pay up before any action has been taken, that’s a sure sign that they are not legitimate. According to the federal Credit Repair Organizations Act, doing so is illegal.

2. A company that promises to dispute accurate information on your report is not worth it

No matter what kind of promises they may make, if a company tells you they can remove debts that are accurate on your report or ones that would be non-negotiable, they are lying. If something sounds too good to be true, it most likely is.

3. Sign a written contract

Terms of the agreement must be outlined in a contract and both parties must sign. While this probably seems obvious, not every company may offer a contract or layout their conditions even though they are required to by the Credit Repair Organizations Act. Be sure to review and read all the conditions before agreeing.

4. Be aware that a company might not be able to help your specific situation

Don’t assume that your bad credit can be remedied — sometimes there is simply nothing that can be done. But even so, don’t let this discourage you from trying to repair your score. Doing something to fix your debt is always better than doing nothing!

5. Anything a credit company can do, you can do yourself

If you want to dispute the information on your credit report, you can do this yourself; however, the legal process can be confusing and messy if you are unfamiliar with legal battles.

Many times it is safer to try to fix your score on your own, but with a trustworthy company that has your best interest at heart, it will be less headache for you.

Is Credit Repair Legal?

It may seem like credit repair would be against the law, but we assure you, it is completely legal. The three acts that protect repair companies are the Fair Credit Billing Act, the Fair Debt Collections Practices Act, and the Fair Credit Reporting Act. 

The companies do, of course, have to abide by the law and there are exclusions to what they can do. You have a legal right to repair your credit and challenge any incorrect information on your record.

How Long Does Credit Repair Take?

Every company may vary, but in general, after a credit company sends a letter to a bureau to dispute information on your report, it will take about 30 days for the bureau to review it.

An investigation will take place and any company that has provided you with your credit information will be asked to review your report to make sure there are no inaccuracies. The credit bureau will then send you the results of the investigation within 5 business days. Bureaus can opt-out of an investigation, though, if they feel that the dispute is fraudulent or pointless.

Finding the Best Credit Repair Companies

It can be a battle to find trustworthy companies that will act in your best interest, but the right company (we recommend Credit Saint) will set your record straight and help you prepare for your future financial decisions.

The most important factor to consider when choosing a credit company include:

  • Reputation
  • Speed of service
  • Accreditations
  • Customer support
  • Pricing

Each of these deciding factors should influence which company you choose. If you’d like a more in-depth discussion about which companies are the best options, we have gathered a detailed list of the best credit repair companies that we’ve found to be the most reliable.

You will also find information such as pricing, company perks, Better Business Bureau ratings, customer service ranks, and links to each company’s website.

Conclusion

Repairing your credit can be difficult, but with the help of credit repair companies, you don’t have to do it alone. If you want to raise your score, release some of your debt, and prepare for a more secure financial future, then consider hiring a credit repair company.

Remember: the worst thing you can do is nothing! Don’t keep sitting on that debt if something can be done about it — take action and reach out to a trusted company today.

Steven Millstein
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Categories Credit