Selecting a credit repair company to help you improve your credit score is a big decision. A typical credit repair service will cost you a few hundred dollars and will take up to a year to complete their service. Choosing the wrong credit repair company can end up wasting money and perhaps more importantly, your time. Choosing the right credit repair company, however, may be one of the best things you can possibly do for your financial future.
Improving your credit score can be the difference between whether or not you get into a new house, car, or even a job. A higher credit score may also help you refinance your existing payments so you end up paying less every month. A trusted credit repair company can lend their expertise and help you on your way to achieving these results.
What do you need a credit repair company to do for you?
A good place to start when determining which credit repair company is best for you is to figure out what needs to be done to improve your credit. The process of repairing your credit can involve much more than simply disputing your credit
with the credit bureaus. You should make sure to use a credit repair company that can fulfill all of your credit needs.
When most people think of credit repair they think of a process that has become known as credit report repair. When working to repair your credit using credit report repair, a credit repair company is using your rights under the Fair Credit Reporting Act to dispute certain items in your credit reports directly with the credit bureaus. This element of credit repair has helped many people with erroneous, incomplete, or unverifiable information on their credit reports improve their credit scores.
While credit report repair is a good start, many people find that it is not enough. Credit report repair works when the credit bureaus are not able to verify that the questionable items in your credit reports should be there. In the case where a creditor continues reporting the questionable item and basic credit report repair is not effective, some credit repair companies also provide creditor interventions and debt validation services, to further help repair your credit.
Many leading credit repair companies will work directly with your creditors using a variety of tactics to get them to stop reporting the questionable accounts to the credit bureaus. They may also work with collection agencies and others to get them to stop reporting questionable accounts or change the way the accounts are reported. A credit repair company may even go so far as to challenge the legitimacy of a reported debt.
Depending on your current credit situation, you may be best served by a credit repair company specializing solely in credit report repair or one that can also provide a full catalog of credit repair services
How can I tell if a credit repair company should be trusted?
The Credit Repair Organizations Act is designed to protect you from credit repair scams.
Unfortunately, credit repair is an industry that has received a bad reputation because of the publicity afforded to credit repair scams. While fraudulent credit repair firms tend to be shut down quickly, it is still in your best interest to learn how to identify the differences between a legitimate credit repair service and a credit repair scam.
An easy way to do this is to know a few of the laws that govern credit repair companies. These laws as defined in the Credit Repair Organizations Act were designed to protect you from credit repair scams while also protecting your right to get help with repairing your credit reports.
The first law you should be aware of pertains to the way credit repair companies can bill you for services. In a typical credit repair scam, the so called credit repair company charges a large upfront fee (many hundreds or even thousands of dollars) for service. This allows them to collect their money, avoid performing the agreed upon credit repair work, and disappear when too many people begin complaining. Under the Credit Repair Organizations Act, credit repair companies are only permitted to bill for services after they have been performed. Any company who tries to collect your money before performing services is in violation of the Act and should not be trusted.
The second law you should know about addresses another common credit repair scam
known as file segregation. File segregation is the highly illegal process of creating a new credit identity with the credit bureaus. This new clean credit identity is then used when applying for credit because it does not contain any of the questionable items on your real credit reports. Any credit repair company who offers to "repair your credit" using file segregation is clearly operating on the wrong side of the law and may get you in legal trouble as well.
Some additional guidelines described in the Credit Repair Organizations Act make it illegal for any credit repair company to promise your credit score will increase, to not inform you that you have the right to repair your credit on your own
, and to not allow you to cancel service whenever you want.
Another way you can find out about a specific credit repair company is to look up their BBB (Better Business Bureau) reports. The BBB keeps notes on complaints made against companies. If the BBB report for a credit repair company lists multiple unresolved complaints or an overall low rating, you should be wary of the company. In addition, beware of any credit repair company that does not list credit repair services as one of their offerings in their BBB filing. The BBB has very strict standards for credit repair companies so many fraudulent companies will not report to the BBB that they offer credit repair.