New Year’s Resolution: Credit Repair Differences Between DIY Repair and Using a Company

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Credit repair is an achievable goal with a variety of options. Thanks to the Fair Credit Reporting Act (FCRA), every consumer has the right to pursue credit repair themselves. You might be thinking: “If I can do it myself, why would I hire a credit repair company?”

The answer to your question poses a long list of inquiries. While you have the option of DIY credit repair, few people realize the commitment and skill it requires until they have tried — and often, failed — to achieve it. Below you’ll find the differences between professional services and DIY credit repair. You’ll also find corresponding questions that illustrate why working with an industry expert may be the best option.

  • Knowledge. According to a survey conducted by the Consumer Federation of America and VantageScore Solutions, most Americans don’t understand how their credit scores are calculated and used. This includes factors of credit scoring and laws that govern consumer protection. While a novice must spend hours learning about consumer protection laws, credit validation and dispute processes, and the correct channels of communication, a credit repair company is equipped to handle issues quickly and efficiently.

Question

You plan to buy a house this year and are hoping to secure the lowest interest rate. How will you accomplish your goal? What do you need to know in terms of:

  • Managing existing debt
  • Taking on new debt/credit utilization
  • Applying for a joint loan with a spouse
  • Average time needed for credit repair before applying for a mortgage loan
  • Relationships. Fast credit repair often relies on business relationships with lenders and the credit bureaus themselves. Working with a well-known credit repair service allows you to benefit from an existing and well-established rapport with industry leaders.

Question

Your credit card provider recently corrected an error on your account, reducing your balance from $5,500 to $550. The change significantly improves your credit utilization ratio and invalidates a mistaken late payment. Your creditor has reported the changes to the bureaus, but you haven’t seen any updates on your credit reports. Should you contact each credit bureau individually, or will one phone call suffice?

  • The cornerstone of credit repair is potential savings. While your credit score could improve by taking the DIY route, reaping the rewards may require a little extra work. A few examples of these savings include:
    • Interest rates. Whether it’s a fixed loan or revolving debt, good credit means access to the best interest rates available on mortgages, auto loans, credit accounts and more. That said, improved credit doesn’t always equal immediate benefits.Question

Your credit score recently improved by 40 points, placing you in the “Good” scoring category. Despite the change, your credit card’s high APR doesn’t budge. What are the steps to lowering your interest rate and saving money?

  • Insurance premiums. Insurance is the business of risk, and the higher your credit score, the lower your risk. Improving your credit can save you thousands each year in medical, home and auto coverage. As we learned from the question above, however, a credit shift does not always translate to immediate savings. Extra steps are necessary to secure a new and fair rate.
  • Cash. Lower interest rates and insurance premiums equal cash in the bank. When it comes to credit stability, there are several ways to maximize your potential.

Question

A recent credit score improvement has saved you $275 per month. You have $3,300 in credit card debt and a $22,000 student loan. You haven’t saved much for retirement. How should you use your cash to tackle debt, plan for the future and pursue overall credit strength?

Question

A recent credit score improvement has saved you $275 per month. You have $3,300 in credit card debt and a $22,000 student loan. You haven’t saved much for retirement. How should you use your cash to tackle debt, plan for the future and pursue overall credit strength?

  • Time and effort. Perhaps the primary benefit of credit repair services versus DIY is time and effort. Unless you are able to devote hours to developing a skilled knowledge of consumer law, credit repair process and correspondence, hiring a professional is a wise choice.

Question

After ordering your credit reports, you notice that an account in your Experian file is incorrect. What are the next steps surrounding:

  • Identifying the consumer law that allows you to correct information on your credit report
  • Deciding who to contact — and how — to address the issue
  • Understanding how long the change will take
  • Following up if no action occurs
  • Tracking correspondence, having documents notarized, filing the proper paperwork, etc.

The bottom line: Do-it-yourself credit repair is possible, but it isn’t easy. Consider an advocate on the path to a better future. Don’t let the details deter your plans.

 

Related Articles:

Watch Out for These 5 DIY Credit Repair Mistakes

Avoiding Illegitimate and Unethical Credit Repair Companies

Why It Takes Time to Repair Your Credit Score

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