When a person’s credit is not where it needs to be, it may be because of mistakes made on one or multiple credit reports. Credit repair involves hiring a credit repair service to dispute or organize credit reports so it reflects correctly on a credit score. Legitimate credit repair services exist and they are out there to help consumers. Credit repair can even be done by yourself. Before seeking out a credit repair service or trying to attempt it yourself, it may be useful to understand the good, the bad, and the ugly when it comes to credit repair services.
How Credit Reports Work
Credit reports are essentially a statement that lists all previous and current credit activity. Credit bureaus or consumer reporting agencies gather this information from different types of financial lenders. This financial information gives a lender an idea of the spending, borrowing, and repayment habits of a person, and helps future lenders determine eligibility. A credit score is linked to a credit report but it does not appear on the report. There are three major credit bureaus/reporting agencies and they may not all have the same information. If there is a mistake on a credit report, a person has the right to dispute the legitimacy of it by providing evidence in the form of documentation.
The Good of Credit Repair Services
Everyone who uses credit has a series of rights; that their credit must be completely accurate, fair, and it must be shown to be true. Credit repair services help consumers fight for those rights by helping them dispute any mistakes that show up on a credit report. There are a few advantages of using a credit repair service:
- Direct Connection to Creditors– Credit repair services can connect directly with creditors, and get them to work with the dispute rather than going directly to the credit bureau (this may improve chances of winning a dispute).
- Knowledge of Types of Listings– If there are multiple times a creditor shows up on a report, because of change of ownership of the company, debt handling changes, or simply a mistake, a credit repair service may be able to know how to look out for those scenarios.
- Knowing to Look at Multiple Reports– Credit repair services will pull credit reports from all three major credit report agencies to find inconsistencies in others.
- Knowledge of Working with Complicated Issues- When things like identity theft or fraudulent accounts happen, it can be difficult to prove illegitimacy through documentation. This is where credit repair services come in.
- Using the Law– A reputable credit service will know about the different laws that exist in the financial world and will work with those to help win disputes.
The Bad and the Ugly of Credit Repair Services
When it comes to credit repair services there are reputable lenders out there, but there are also lenders who are not legitimate and are simply out there to try and con people into giving them money. When looking at credit repair services it might be useful to know a few things that reputable credit repair services DO NOT do:
- Ask for Advances– It is unlawful for credit repair services to charge a person for work that has not been completed.
- Guarantee Extreme Results– If a credit card repair service is not legitimate, they will often phish for people by claiming that they can guarantee an extreme increase in a credit score.
- State that they Can Terminate Accurate Data – If a point on a credit report is legitimate there is no way that a credit report service can terminate it, saying otherwise should be a red flag for illegitimacy.
- Anything Else That Sounds Too Good to Be True– If a credit repair service makes any kind of outlandish promises it is probably not legitimate.
Along with paying attention to these points, it is important to know your rights and review a contract before signing up for anything. It is also a good idea to look at more than one credit repair service. If something doesn’t seem right, a person can always check with their state Attorney General and local consumer protecting agency. Also keep in mind that when working with credit, personal information is exchanged, another reason why making sure a servicer is legitimate is important.
Attempting Credit Repair Yourself
Credit repair can be done by oneself. However, it is best to go down this route when disputes are simple, such as a duplicate entry of credit. When disputes are complicated, involving things like account or identity theft, it may be best to go to a credit repair service. If one does decide to dispute a credit report by themselves, there are some steps to take:
- Gather all credit reports from the three major credit bureaus
- Check For discrepancies for each credit bureau report
- Have documentation proving your case
- Mail or fill out a dispute letter to each respective credit agency
Credit reports give lenders a picture of your financial past and present. The credit reporting system, like most systems in the financial world, is not perfect, and often credit reports can carry mistakes. Credit repair services can be a useful tool when looking to fix complicated credit issues such as account or identity theft. As a consumer, it is important to keep track of all the things listed on a credit report, for fairness and for protection. When looking for credit repair services, finding a reputable service is another important step in self-protection.