The Realities of Credit Repair Companies

If you have ever had a bad credit score, you have more than likely felt the effects of how much credit can affect your life. Your credit report can directly impact your ability to get a loan, buy a car or a home, start a business, and sometimes even get a date. Building and maintaining a good credit history are integral parts of continued success in life.

But for some of us, establishing a good credit foundation has been a difficult task to accomplish. There are times in everyone’s life that we encounter hardships or other “bumps in the road” such as loss of employment, divorce or separation, unexpected medical bills, and more. Sometimes these unexpected life events can hit our credit score hard, causing long lasting effects that impact our life in so many ways.

So how do you get out of that downward spiral? One popular way to improve your credit score is to use a credit repair company. Before you jump to a decision of which organization to use, it is important to know a few things about credit repair companies.

Can credit repair companies fix & repair your credit, as they promise?

What can a credit repair company do for you?

Credit repair companies exist to help individuals repair their overall credit score by extensively evaluating your credit report to identify possible inaccurate information. They then challenge those items as well as those that are unfair or unsubstantiated and request that they be corrected or removed.

The Letter of Deletion

The primary tool used in their battle to remove negative credit report remarks is a “Letter of Deletion.” This letter is simply a written or electronic request to remove inaccurate marks from your credit report which is sent to all three major credit bureaus (Transunion, Equifax, and Experian).

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Attempting to remove negative information is a reactive strategy. The proactive one is focusing on building credit (and reducing debt). A good credit repair firm will help you develop a strategy to proactively rebuild your credit, which can be difficult to come up with on your own. This is not a quick fix but there are definitely strategies that will help speed up the process.

What credit repair companies can’t do

Many credit repair companies claim that they can fix all of your credit problems and even guarantee that they can accomplish a credit overhaul for you. But the reality is often something very different.

There are no guarantees

One important thing to remember is that there are no guarantees in this process, and despite their best efforts and abilities, no one can remove negative information from your credit report legally if that information is accurate and within the legal time frame. Accurate information, whether good or bad, usually stays on your credit report for seven years. Exceptions to this would be in the case of a bankruptcy filing, which remains for 10 years, and criminal information which can remain forever. Regardless of what anyone might promise, no credit repair company can change that.

In 1997, Congress enacted the Credit Repair Organizations Act (CROA), which was designed to protect the public when dealing with credit repair issues and allows you to ask for an investigation of information in your file that you believe is inaccurate or incomplete. It is free of charge for you to do this on your own if you chose to.

This same law protects consumers from shady organizations as well as setting up industry guidelines. These regulations prevent companies from charging for services in advance, making any promises to the consumer, and requires that they allow the customer to cancel at any time.

What to look for when hiring a credit repair company

A good credit repair company will have several flagstones that set it apart from some of the fly-by-night companies that continue to surface.

Licensed, Registered, and High-Rated

One key thing you should look for is that the organization has licensed legal staff and is registered with the Attorney General. Another important aspect is the length of time they have been in business as well as their rating with the Better Business Bureau (BBB). When looking into that you can also see how many claims have been filed against them and how they have resolved them.

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Further, a reputable organization will offer more than just credit repair. They should also offer you credit counseling or advice and strategies to re-build good credit. After all, there is no point in re-establishing good credit if you don’t know how to keep it.

Finally, you will want to make sure that progress is being made at an acceptable rate once you do choose a company to go with. Unfortunately, there are too many crooked organizations out there today that will be more than happy to collect a monthly fee but are slow to act on your issues.

Where to find reputed credit repair companies? What to avoid when looking for one?

Unfortunately there are many organizations out there that promise results and even often a “100% guarantee” that they will fix your credit woes. But rather than viewing this as a desirable feature, it should really be a big indication that you need to read the fine print.

Fancy Guarantees and Money Upfront

Credit repair companies are required to disclose your legal rights to you at the start of the relationship, so if that is something they manage to leave out of their “sales pitch”, you might want to walk away before they go any further.

Also, if they ask for any money up front before they do anything for you, or tell you to send the payments to them instead of your creditors, they are operating in violation of Federal regulations.

Another huge red flag is if they ask you to lie or provide false information to your creditors or the 3 major credit bureaus, or if they tell you to apply for an Employment Identification Number (EIN) in order to create a new credit profile. If you engage in this kind of criminal activity, you can be charged with fraud.

SuperMoney has a list of top rated credit repair companies on our reviews page, with some very good reviews from our users. Check it out!

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What are the top credit repair companies out there? Which one is right for you?

The answer to that question really depends on what services you need and how much you are willing to pay for them. Some services offer credit monitoring at no additional charge, 24/7 online account access or mobile apps that allow you to view the progress of your credit repair on the go.

Regardless of whether or not you need all these options, make sure the company has good ratings for customer service and is a well-established and reputable organization.

Many non-profit organizations exist for the sole purpose of helping people repair their credit. These companies often provide free or low-cost services. You can ask a local trusted agency or financial institution who they would recommend based on your situation.

Additionally, you can always check the website for the National Foundation for Credit Counseling which is the largest non-profit credit counseling service in the United States.

How to keep track & repair your credit? Things to know.

It is important to keep a close eye on your credit report and your credit score in order to make sure it remains accurate and relevant. You can receive a free credit report from each of the 3 major credit bureaus at AnnualCreditReport.com once every year, or in the event that you are denied credit or employment based on your credit.

It is also important to realize that credit repair is not just for those of us who suffer from the lowest credit scores and can’t seem to find anyone to lend to us. Remember, even if your score is not the worst, improving it even slightly can help lower your interest rates and save you thousands of dollars over the term of a loan or the time it takes to repay your debt.

The bottom line is that only time, effort and a secure plan for repaying your debt will ensure the improvement of your overall credit score.

If you are shopping around for a credit repair company, do take a look at SuperMoney’s top rated credit repair companies here.

Photo Courtesy – Laura