Unfortunately, as millions of Americans are aware, bad credit can haunt you, making it harder to get a loan, forcing you to pay higher interest, and setting back your overall finances for years to come. Fortunately for so many, there are ways that they can improve their credit. One such example is credit repair companies.
What Do Credit Repair Companies Do?
Credit repair companies work with companies that manage your credit reports, or an agency that reported your debt. They then attempt to get negative credit events – like late or missed payments – removed from your credit report. In so doing, they will remove strikes against your credit, thus improving your credit and overall credit score. This will then make it easier for you to manage your finances, consolidate loans, and obtain lower interest rates.
A reputable credit company will be able to achieve this goal by gathering information from you, then contacting the credit organization, and using their pre-existing relationships in order to get the strike against your credit removed.
Some credit repair agencies go even further. They will also promise you credit monitoring services, thus alerting you when you get a major change to your credit line. This can also be useful for fraud detection or identity theft monitoring. However, it is worth noting that these services can be obtained elsewhere, either at no or minimal charge. Last, some credit repair companies will also provide financial education to help ensure that you never find yourself in a bad credit situation again. This can be truly beneficial and help you maintain a positive credit score going forward.
It is worth noting that these credit repair companies are for-profit businesses. Some are scams, although many are legitimate. Furthermore, keep in mind that they don’t do anything that you can’t attempt as well – the biggest difference is that they have the skills and expertise to know what to do. Furthermore, it is possible that the strike against your credit may disappear on its own after time, or that the impact that the missed payment in question is having on your credit score has been overstated.
How Are Credit Repair Companies Beneficial?
The truth about credit repair companies is that they don’t do anything that you can’t do on your own – they just may be able to do it better. You are free to contact a credit organization or debt collector and dispute a claim or late payment. You are free to send as many letters as you want, or hire an attorney and take anyone to court to dispute a claim. Indeed, there are many things you can do for free that credit repair companies do on a regular basis, and there are specific websites that lay out how you can get negative strikes removed from your credit report.
So, what’s the difference? The truth is that if you find a reputable credit repair company – and there are many – they have the time and expertise to know the best and most efficient techniques. They will know who to call, what to say, and what the best method of contact is. These are all experiences that you likely will not have. Indeed, the best metaphor is that hiring a credit report is like hiring someone to do a home improvement project on your house. Sure, you can do it on your own, but you may mess it up, and if paying a little money can help to get you a better result, isn’t it worth it?
Are Some Credit Report Companies Scammers?
Unfortunately, yes. There are disreputable companies out there that don’t care about your credit and just want to separate you from your money. As noted by the United States’ Consumer Financial Protection Bureau, there are some ways you can tell a scamming company. Scammers will make explicit promises, demand up-front payment, refuse to explain to you how you can do the same thing, or tell you not to contact any credit reporting companies on your behalf. All of these are not only wrong, but they may be illegal. These are absolutely practices that you should watch out for.
If you are interested in using a credit repair organization, it may be a good idea to do your research first. Google their reviews and google the name of the company with the word “scam.” Furthermore, many banks and financial planners have lists of reputable, high-quality credit repair companies that can get you results. Make sure to approach a trusted financial institution or planner if this is something you are interested in pursuing.
Do Credit Repair Organizations Work?
It can be hard to track down specific statistics that demonstrate whether or not credit repair companies truly work. However, based on anecdotal experience and reports, it appears that the answer is yes. While there are scams out there, reputable organizations can help you clear negative issues on your credit score and help you get your financial life on track. Keep in mind that a credit repair organization is not a cure-all, and they don’t do anything that you can’t do yourself. However, they do have the time and expertise to know what they are doing and do so most efficiently. Some evidence indicates that credit repair companies are better at making credit repairs on certain items. This includes removing erroneous debt, outdated strikes, and fraudulent expenses or debt that you didn’t really incur. It is also worth noting that the more complicated an issue on your credit score, the more likely it is that a credit repair organization will have more success than you at removing it.
As you can see, credit repair organizations unquestionably can be helpful to you and your financial future. If you are going to take advantage of their services, make sure to do your homework, and extensively research a company and its track record of success. Furthermore, it may be worth attempting to repair your own credit at least once, if only to see if you can address whatever issues there are.