Credit repair companies are all over the place. On the internet and offline, they seem to be everywhere.
Some of these companies claim they can help you improve your credit score easily within a short period of time.
Others say, they can get the same job done but require more time that run into several months.
Some will ask you to pay a fee right away. Others will ask you to pay a fee while doing the job or pay some now and then pay the rest later if they actually help you increase your score.
In fact, there seems to be too many credit repair companies making too many claims about what they can and cannot do.
If you have any problem with your credit score, either a poor score or you observe an error in your score, odds are you may consider the services of a credit repair company.
For instance, if you have poor credit, you may find it very difficult to be eligible for a credit card, secure a personal loan or even rent an apartment.
To make all or any of these situations easier and to make you eligible for such things, credit repair companies will promise to help you improve your score.
But their services aren’t free.
So the question is, what can a credit repair company really do for you?
Normally, many credit repair companies will help you to assess your credit reports and attempt to fix any negative thing they find with the three major credit bureaus (TransUnion, Equifax, and Experian ) on your behalf.
I guess such claims will trigger several different questions you’ll need answers to right away!
Can a credit repair company help you to increase your credit score?
Can they help you get the loan you’re seeking within the next few days or weeks as many of them claim?
How long will it take them to rebuild your credit if they can?
Are their services worth the fees they’re requesting?
Let’s start with what a credit repair company is.
What’s A Credit Repair Company?
A credit repair company is a business entity that helps people enhance their credit in return for a service fee.
Typically, these companies usually offer to take care of every “heavy lifting” that is related to working with any or all three major credit bureaus.
Credit report companies aren’t the same as credit counselling agencies. The latter is a free platform from nonprofit financial education organizations. They help you assess your credit report, debt, and finances.
The ultimate aim of credit counselling agencies is to teach you how you can enhance and effectively manage whatever financial conditions you find yourself.
While the intentions of genuine credit repair companies are absolutely sincere and trustworthy, many fake agents are using credit repair as a means to take advantage of people’s financial situations.
As such, it is absolutely crucial for you to research whatever credit repair company you intend to work with before putting your signature on their fine print.
How To Vet A Credit Repair Company
There are several different methods of verifying credit card companies to figure out if they are genuine or not.
- Visit the Better Business Bureau to read reviews about the company.
- You should v
isitthe Consumer Financial Protection Bureau’s complaint database and search for the credit repair company on your shortlist.
- Visit a search engine like Google, type the name of the credit repair company and type review alongside it and then search. Every review related to the company on the web will pop up in the search result.
- Visit any other financial services review website you know.
Don’t ignore the golden rule – if it looks too good to be true, walk away from it!
Most importantly if you come across any credit repair company that provide these services, stay away from them:
- Get rid of the
precisenegative item from your credit reports.
- Asking for payments prior to offering the credit repair service.
- Lawfully delete and build a new credit identity for you.
- Assure you of enhancing your credit report no matter what
How Credit Repair Companies Do Their Job
If you hire a credit repair company to rebuild your credit, chances are they will start by asking for a copy of your credit report from TransUnion, Equifax and Experian.
Here are the key negative things the credit report company will look out for when they assess your credit report:
- Tax liens
Once they are down with the review, they will come up with a plan to dispute and negotiate with each of the bureaus to get rid of those items.
Such a plan could include:
- Asking for verification of information
- Writing and sending letters to debate false negative marks
- Send cease-and-desist letters to your debt collectors
The credit repair company could also suggest that you apply for new accounts to boost your report with positive data.
However, you should be careful if you’ve run into problem with managing your credit before. In such a situation, a new account may not be the most ideal option.
Better still, it’s not a great idea to seek additional credit when you really don’t need one.
How Much Do You Have To Pay For Credit Repair?
Although there’s no one-size-fits-all approach for determining the price you’ll have to pay for the services of a credit repair company, there are several metrics that can help you determine your credit repair cost.
However, the exact amount you’ll have to pay and how it will be determined will vary based on the company. However, there’s a rule of thumb these companies have to adhere to.
A genuine credit repair company cannot request for or receive payment before they deliver the agreed result.
They can only request for and receive payment after delivering the agreed result.
Based on the type of company, you may be asked to make a payment of one-time flat fee. Also, you may be asked to make payment for each negative mark the company get rid of from each of your credit report.
The fee could start within the range of $35 for each deleted derogatory mark to about $750 or even higher.
Some credit repair companies will charge you by the month. Their fee could be within $50 to $130 or even more.
They can also ask you to pay a fee for obtaining access to your credit reports or setup fees.
You’ll have to consider how much work hours is required to rebuild your credit or delete each derogatory mark from your credit report.
If your report only contains one or two derogatory marks, odds are you should apply any fee for paying down debt and challenging any derogatory mark in your reports all by yourself.
How Long Does It Take To Complete A Credit repair?
Considering the large volume of reviews the three major credit bureaus have to handle every other day, they typically have 30 days after they receive your dispute to investigate and ascertain information on your credit report.
In most cases, the bureau will contact the company that sent them the message and requested for an investigation.
However, the credit bureau is also mandated to send you the outcome of the investigation after five business days of rounding off the investigation.
Nonetheless, if the bureau considers the dispute as “unreasonable” it may decide not to waste any time and resource to conduct an investigation. But they still have to report that to you within a period of five working days.
Other related topics:
What If You Decide To Repair Your Credit On Your Own?
If you intend to repair your credit all by yourself, there are several things you can do to get started.
Let’s find out:
- Assess your credit reports to figure out a possible error
- You can dispute wrong information by reaching out to the major credit bureau
- Manage your credit appropriately to rebuild your credit in the long run
What Should You Look Out For?
If you decide to work with a credit repair company, you’re expected to take great caution. This is because most of the complaints about credit repair companies are about taking advantage of people’s financial situations.
Also, if you end up with a trustworthy company, odds are their services might not be as good as you expected.
You may end up saving a whole lot of money if you decide to dispute the mistakes in your credit report without the help of a credit repair company.
How Are Credit Repair Companies Regulated?
It is unlawful for credit repair companies to give false information about their service, and the outcome of such services, according to the rules set by the Credit Repair Organizations Act, or CROA.
The Consumer Financial Protection Bureau is ready to help you run into trouble with any credit repair company or if they take advantage of you financially. All you have to do is submit a complaint to the bureau.
Under the CROA, credit repair companies have the following requirements:
- To hand you a written contract that contains details of your lawful rights and the services the credit repair company will provide
- Giving you permission to cancel your contract within three days without paying any charge
- Delivering the agreed/promised service before requesting or receiving a fee
So if you come across a credit repair company that turns down your question, asks for payment up front or failed to put their promised services in writing, that’s a part of the red flags that the company might not be a genuine one.
The Bottom Line
Fairly enough, credit repair isn’t rocket science!
One of the best things you can do before seeking the service of any credit repair company is to reach out to a credit counsellor first.
With credit counselling you can get a crystal clear picture of what your credit report contains and how to enhance your financial situation in the long run.
Also, you’ll have to consider how much time you need to do your credit repair on your own compared to having a credit repair company do it for you.
Before you make up your mind to opt for any credit repair company, look out for all the tell-tale signs and red flags mentioned in this article. So you wouldn’t end up with the wrong company.
Find out things you can do to stop unauthorized access to your credit report, here.