Having a good credit score is very important anytime you want to borrow money. Whether you are taking out a loan, getting a car, or buying a home, lenders will look at your credit score. The better your credit score (among other factors), the easier and more affordable it will be to borrow money. You will get better rates and terms, as a higher credit score generally means you are less risky for the lender.
A low score often means that you have had issues with credit in the past, and thus some lenders might be unwilling to work with you or will have unfavourable rates on any loans they are willing to provide.
But if your credit is in a bad place, don’t worry. There are credit repair companies to help you get back on the right track and help you improve your credit score. However, before you work with one of these companies, it is a good idea for you to know how credit repair companies operate. With that in mind, this article will take a closer look at everything you have ever wanted to know about credit repair companies.
What are Credit Repair Companies?
A credit repair company is an organization that aims to improve your credit by inspecting your report and looking to remove or change information that is hurting your score. These companies will do all they can to get your score back to a place you can be happy with.
They take on all the work involved in the negotiation process, which can save you a ton of time and energy. You simply provide them with the information and/or documents they need, and they will do the rest. It can be a simple and easy way to improve your credit and is great for those who may not have the financial knowledge or ability to improve their credit themselves.
How do Credit Repair Companies Work?
So how do these companies work? First and foremost, they will want a copy of your credit report. Once they have the copy, they will begin to review it and look for bankruptcies, liens, late payments, collections, and potential mistakes.
Once they have identified issues or errors, they will develop a plan to dispute these issues with the creditors directly. This often involves sending out dispute letters, asking for information validation, and even reaching out to potential debt collectors. They do a lot for you in your effort to improve your credit.
Credit bureaus are generally given around a month to investigate the disputes your credit repair company has made and will notify credit repair companies a few days after the investigation has been completed to let them know of the results.
What Does it Cost to Work With These Companies?
Now that you’re aware of how these companies work and how they help people let’s look at the costs involved. The fee varies from company to company, so you likely want to shop around a little and see which offers the best price. The price isn’t the only thing to think about, but it is certainly one of them.
In general, these fees will either be a one-time fee or a fee for each negative item they successfully remove from your credit report. It can also be a monthly cost if that is how the company prefers to do it. There could also be some other associated fees, but they can vary. Many people will pay a few hundred dollars, but it will be less for others and could be more.
Also, it is important to keep in mind that these companies should not ask you to pay until they have provided you with their service.
Watch Out for Scams and Fraud
While many credit repair companies are legitimate and want to help you out, this isn’t always the case. Unfortunately, credit repair scams are common, aiming to take advantage of individuals. Because many of those who use credit repair companies are in a difficult spot and might be desperate, they often make easier targets for scammers and fraudulent companies.
These scam companies will appear very legitimate, but in the end, they will simply take people’s money and not offer them a service at all. Many will make outlandish and false claims to entice people to consider working with them. They may guarantee results, say they can create a new credit identity, or even say they can remove all negative information on the report. If something sounds too good to be true, it generally is.
Also, if they want you to pay everything upfront or do not want to put anything in writing, be wary. Before working with any credit repair company, always do your research. You can check out reviews with the Better Business Bureau and what users have had to say about their experiences with the company. If you can find little online about a company, or they make outlandish claims that are too good to be true, it is best to avoid them to be safe.
Improving Credit on Your Own
While working with a credit repair company is a good idea to get everything back on track and ensure there are no issues within your credit report, they aren’t the only way to repair and rebuild your credit. You can do many things on your own to improve your credit score.
This includes making your payments on time and in full and keeping credit utilization low. You also want to ensure you use credit responsibly and not constantly opening up new credit accounts. While rebuilding your credit on your own won’t happen overnight, it can certainly be done if you stay consistent and develop better financial habits.
We hope that this article has helped you learn everything you could ever want to know about credit repair companies.