How to Choose a Credit Repair Company

Choosing a credit repair company can be challenging, given the prevalence of fraud in the credit repair industry. When selecting a credit repair company, check the company’s reputation, ask questions, and fully understand the terms to avoid scams. Learn more about how credit repair companies work and how to choose a credit repair company that meets your needs.

How to Use a Credit Repair Company

A credit repair company is a business that works with consumers to remove incorrect negative items from credit reports. Consumers often turn to credit repair companies when they want to improve their credit score before applying for a loan, such as a mortgage, car loan, or credit card.

In many cases, you can do the same work that a credit repair company does on your own. Some experts believe you should save money by disputing negative and incorrect items on your credit reports rather than hiring a credit repair company. You can file your own disputes with the three major credit bureaus: Equifax, Experian, and TransUnion.

To sign up for credit repair services, you will need to:

• Choose the company: Select the company based on factors such as its reputation and fees. To check the company’s reputation, visit the Better Business Bureau website and Trustpilot review site, check news reports, and look for consumer complaints.
• Sign a contract with the company: All contracts with credit repair companies should be in writing. The contract should explain your legal rights, the services the company provides, what you will pay for the services, how long it will take to see results, and how you can cancel the deal at no cost within three days.
• Be prepared to pay the company: Payment methods for credit repair companies for their services include monthly subscriptions, flat fees, and “pay-per-delete” fees. You may end up paying hundreds or thousands of dollars for the company’s services. These companies are not legally allowed to charge advance fees.

When Is It a Good Idea to Use a Credit Repair Company?

The services of credit repair companies focus on disputing incorrect information on credit reports, but remember that you can complete this work for free. Some individuals may prefer to use a credit repair company. This service may be beneficial for you if you are:

• Uncertain about dealing with credit bureaus on your own: Credit repair company experts have legal knowledge about credit laws, credit reports, credit disputes, and other aspects of removing negative marks from your credit history.
• Short on time: A credit repair company can take the burden of communicating with credit bureaus and filing disputes off your hands, but remember that anything a credit repair company does legally is something you can do without their help.

Credit repair companies also have several downsides that should be considered. These downsides include:

• High costs: Using repair services can cost hundreds or even thousands of dollars. In many cases, you can handle the same tasks yourself without spending a dime.
• No guarantees: Credit repair companies are prohibited from guaranteeing specific results, such as increasing your credit score.
• Fraud: Some credit repair companies take advantage of vulnerable consumers. For example, they may falsely claim that they can remove negative but accurate information from your reports. Only incorrect information can be removed.

Note: The credit repair industry includes fraudulent companies or those that make promises they cannot keep. Be sure to deal with a reputable company before paying.

What You Need to Use a Credit Repair Company

To use a credit repair company, you will need to:

• Sign up for the company’s services.
• Sign a contract with the company.
• Provide
• Personal information so the company can review your credit reports and submit claims to credit bureaus.
• Payment arrangements. The company may charge a monthly subscription fee or a flat fee, for example.

Choosing a Credit Repair Company

Be cautious when selecting a credit repair company to ensure that the company is legitimate and can meet your needs. Here are some tips for choosing a reputable credit repair company:

• Research online for reviews and complaints about the credit repair companies you are considering.
• Avoid any companies that have a proven track record of defrauding consumers.
• Compare fees among credit repair service providers.
• Learn more about the company’s experience in credit repair, including the type of training professionals receive and how long the company has been in the market.
• Inquire whether any services will be outsourced to another company.
• Understand the items that will be discussed in your credit reports.
• Ask about the duration of the credit repair process.
• Be skeptical if the company makes any promises that sound too good to be true.

Alternatives to Credit Repair Companies

Credit repair companies aren’t the only entities that can help you improve your credit. Here are some alternatives:

• Non-profit credit counseling agency: A non-profit agency can help get your credit back on track by providing advice on managing your debts and creating a debt repayment plan, among other services.
• Do it yourself: Instead of hiring a credit repair company to correct errors on your credit reports, you can obtain free copies of your annual credit reports, look for errors, and dispute any incorrect information. Get a free copy of your report from AnnualCreditReport.com.
• Debt settlement company: Debt settlement companies aim to negotiate with creditors or debt collectors to reduce your debts, which may improve your credit reports and credit scores. However, debt settlement companies often charge high upfront fees and may make promises that exceed what they can deliver. Their services may also negatively affect your credit score.

Frequently Asked Questions

Is credit repair service worth it?

In many cases, credit repair services are not worth the money because you can report errors on your credit report yourself for free. You can report errors to the three major credit bureaus: Equifax, Experian, and TransUnion.

Who should consider using a credit repair company?

You might consider using a credit repair company when you are too busy or uncomfortable communicating with credit bureaus on your own. Remember that credit repair services usually come at a high price, and you can take the same steps for free.

How long does credit repair take?

Generally, it takes three to six months to repair credit if you are working with a credit repair company. Credit reporting agencies must investigate the claim within 30 to 45 days. If you or the credit repair company provide additional information after submitting the claim, this process may be delayed by an additional 15 days.

What does a credit repair company do?

A credit repair company primarily submits claims to credit bureaus regarding incorrect information in your credit reports. The ultimate goal is to remove that information from your credit reports, which may help improve your credit score.

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Sources:

• Take Charge America. “What Happens During the Credit Repair Process?”
• Consumer Financial Protection Bureau. “How Do I Dispute an Error on My Credit Report?”
• Federal
• Federal Trade Commission. “Fixing Your Credit FAQs.”
• Federal Trade Commission. “Credit Repair Organizations Act.”
• Federal Trade Commission. “Debt Relief and Credit Repair Scams.”
• Consumer Financial Protection Bureau. “How Can I Tell a Credit Repair Scam From a Reputable Credit Counselor?”
• Consumer Financial Protection Bureau. “What Is Credit Counseling?”
• Consumer Financial Protection Bureau. “What Is a Debt Relief Program?”
• Consumer Financial Protection Bureau. “If Credit Reporting Error Is Corrected, How Long Will It Take Until I Find Out the Results?”

Source: https://www.thebalancemoney.com/how-to-choose-a-credit-repair-company-7968287