July 11, 2024

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Should You Hire a Credit Repair Company?

Credit score

Negative items on your credit report, including late and missed payments, impact your credit score. Your score decides whether you’re eligible for a credit card or how much you’ll pay for a mortgage. If you’ve got errors on your credit report, you need to resolve them, for which credit repair services are available. Should you use them or not? Read this blog to learn.

Figuring out how to fix your credit can cause confusion and frustration. But you don’t have to fix it alone. Using a credit repair company’s help will be the right thing to do.

Credit repair can take several months without guaranteeing your credit score will improve. Besides, repairing can’t remove negative remarks if they are accurate and verifiable.

Understanding credit repair.

Getting a loan or credit with good terms is difficult when your credit score is low. Even if you acquire loans from some lenders, a bad credit score can make you pay a higher interest. When it comes to fixing your credit, it can be an overwhelming task for individuals to handle alone. 

A credit repair company can handle these problems on your behalf. The process includes removing inaccurate or unfavorable information from your credit report. 

Credit repair solutions.

Obtaining your credit reports and checking them for accuracy is the first step in your repair process. You’re entitled to a free copy of your credit report once a year.

Your credit report can vary from bureau to bureau as some creditors report to only one bureau and not all. Once you have your credit reports in hand, review them for errors. Check for any account that isn’t yours. It could be a sign that someone else is using your account. 

The federal trade commission (FTC) suggests writing questions to the credit bureaus. Explain which information you’re disputing and attach photocopies of documents supporting your case. The law requires the credit bureau to investigate your claim within 30 days. The creditor needs to examine your claim and report it to the credit bureau. The bureau also provides your supporting documents to the creditor.

After completing the investigation, the credit bureau reports the results to you. The creditor must notify all of the credit bureaus so they can correct their files. If the decision isn’t in your favor, you still have the right to explain. You can initiate this process online.

The legitimacy of credit repair.

Although there are reputable businesses offering credit repair services, the industry is also notorious for scams. You should thoroughly investigate any service you’re thinking of using.

The FTC cautions consumers against employing businesses that make assurances about their ability to erase accurate negative information. They can assist you in creating a new identity using a credit privacy number.

The Credit Repair Organizations Act compels businesses to give you a realistic estimate of expenses and a timeline for results. Additionally, you have three business days to renounce services free of charge.

A respectable organization should advise you on managing your current credit accounts to prevent further harm. 

Cost of credit repair.

The service typically depends on different credit repair businesses, and the procedure can take anywhere from a few months to a year. You might also have to pay a setup charge to start the process.

Services can come in tier-based packages, with higher tiers including additional services like credit monitoring or access to credit ratings.

Repairing credit yourself.

You can access a free copy of your credit report once a year from all three bureaus. Then follow these steps:

  • Directly dispute any mistakes on your credit report with the credit reporting agencies. You can settle your conflict yourself more quickly. There is an online dispute procedure for each bureau.
  • Look for reliable but accurate information. For instance, a debt owed to a retailer no longer in business might only be verifiable if the retailer sold the obligation to a collection. They should be able to prove ownership or remove unverifiable information.
  • Improve your payment history. The critical aspect of determining your credit score is how consistently you pay your payments on time. Missed payments may lower your rating.
  • Reduce the amount of credit you are using. Your credit usage ratio indicates how much of your available credit card limit you are currently using. Your score will increase if it’s low. If you can, consider spreading your payments throughout the billing cycle and implementing other credit use reduction techniques. 

Whether you’re repairing credit on your own or paying a company, have a plan for building and maintaining your credit going forward.

Duration of negative remarks on a credit report.

The seven-year timeline for late or missed payments, also called delinquencies, may apply to your credit report whether your account is open or closed. Also, the duration often starts from the date of the first missed payment. 

Bureaus can still clear the credit report seven years after the initial notification of the late payment. But your account can remain on record for ten years if you make it current before paying off or closing it.

Avoiding credit repair scams.

Although reputable credit repair businesses can deliver on their promises, the industry has a lot of scam artists too. The Consumer Financial Protection Bureau provides warning signs to watch out for, such as if the company:

  • Ensures that it can delete all unfavorable information from your credit report. Remember that no one can successfully remove factual information from your credit report. If a business promises to do so, be wary.
  • Suggests that you can challenge even reliable information. It is illegitimate to dispute information you know as being valid.
  • A trustworthy credit repair business asks for payment after starting the process. The federal Credit Repair Organizations Act makes it unlawful to demand advance payment.

If you sign up with a credit repair company, you can cancel that without any charges within three days.

The final words.

If you have bad credit, this may be the time to check your credit report. No matter which approach you choose, keep in mind that fixing your credit can take time.

Employing a credit repair firm does not guarantee a quick boost in credit. A good credit repair company can raise your score to specific points, depending on your circumstances. There may be a monthly fee to repair your credit. However, it can be less costly than having bad credit. 

If you’re looking for a reliable credit repair company, Cool Credit can be your best option to fix your credit score within the budget that suits your pocket.