Credit Repair Quick Fixes: Are They Legit?
It’s tempting to consider a quick fix for everything, including your credit. However, some things are too good to be true. Good credit can’t be rushed, but you can build a good credit history with some strategy.
Slow and steady wins the race for credit
Time heals most things. It sounds cliché, but it also applies to your credit score. Time heals your credit, and it may take some time before you can truly establish a good credit history and credit rating.
However, many borrowers wonder if there is a magic quick shortcut to repairing their credit. The bad news? There are not any. If you see ads for companies claiming they can boost your credit overnight, be careful.
There are legitimate services that can help your credit called credit repair companies. However, they do not review your credit reports and delete all your old negative accounts or willy-nilly add points to your credit score.
The purpose of a credit repair company is only to help you remove inaccurate accounts – not just those that cause a lower credit score. Inaccurate accounts listed on your credit reports can lower your credit score, but you can remove them through litigation.
It can be a long process depending on the severity of the error, but there are several reasons why working with one of these companies can be beneficial.
How Credit Repair Companies and Disputes Work
Credit repair companies can be helpful for borrowers whose identity has been stolen, those whose incorrect names or addresses led to incorrect information, or old accounts that were never deleted.
If you work regular business hours and don’t have time to call debt collectors, creditors, or credit bureaus to dispute inaccurate accounts, a repair company can put you on the right track. The most legitimate have training in credit reporting practices and can contact creditors and credit bureaus for you.
When you file a dispute with a credit bureau, they have 30 days to review it. Often you are asked to provide proof that the account is incorrect. A dispute also puts a hold on an account during this 30-day period, so reporting action temporarily stops. If the credit bureau finds that the account is indeed accurate, the reporting action begins again. If it turns out to be false, the credit bureaus delete it.
However, do not dispute all negative accounts on your credit reports. This is a misuse of the process, and there could be consequences. If you hire a credit repair company to dispute accounts for you, ask them to only do so for those you think are incorrect and be prepared to have proof that they are wrong.
Before hiring a credit repair company, research their practices and policies.
Spot a credit repair scam
While there are legitimate credit repair companies out there, that doesn’t mean scams don’t exist. Some telltale signs of a credit repair scam include:
- Tells you not to contact the big three credit bureaus – The three major credit reporting agencies are Experian, TransUnion and Equifax. If a company tells you not to contact those credit bureaus, walk away. You can dispute accounts through these bureaus yourself without the help of a credit repair company. Disputing errors on your credit reports is your right under the Fair Credit Reporting Act.
- Guarantees a specific number of points – If a credit repair company promises that “your credit score will increase by 112 points within six months,” watch out. There really isn’t a way to promise a specific points increase (unless there’s fraud).
- Promises to delete all negative accounts – You and the credit repair company may only delete accounts that are incorrect from your credit reports. Deleting correct accounts (even negative ones) is fraud. Also, the credit bureaus will notice and put this account directly on your reports, so it’s not possible. Any company that says it can remove all negative accounts from your credit reports should be avoided.
- Asks you to pay before providing services – Most credit repair companies charge for their services, but they can’t charge you an “upfront” fee or ask you for money until they show results. A good rule to follow is not to pay anything until the company has proven its results.
There is no quick and easy solution that can increase your credit score overnight. However, there are some steps you can take yourself that can help you establish a good credit history and increase your credit score over time.
Good fashionable credit repair
If you have bad credit, you are not alone. It is estimated that about 30% of Americans have bad credit. So how do we fix it? We have some quick tips:
- Challenge errors yourself – Comb through your own credit reports and look for anything that could lower your credit score. If you find anything inaccurate in one of your credit reports, you can dispute it online. If you find a lot of mistakes and don’t know where to start, consider a credit repair company. You can request your free credit reports once a week until April 2021 at www.annualcreditreport.com.
- Pay all bills on time – It may sound simple, but payment history has the biggest influence on your credit score. If you miss payments, it can hurt your credit for up to seven years. Stay up to date on all your accounts and you can avoid repos, defaults and accounts sent to collections – which also hurt your credit score.
- Pay off your credit card(s) – Whether you have one credit card or many, pay down balances to at least 30% of their spending limit(s). Higher, and lenders may assume you’re going overboard. Keeping high credit card balances can lower your credit score, so the more balances you can get, the better.
- Add variety – Spice up your credit reports by having both revolving credit, like credit cards, and installment credit, like car loans. Lenders like to see borrowers with a variety of credits. If you manage different types of credit well, it can increase your credit score.
- Keep old accounts open – Your credit score is influenced by the average age of all your accounts. If you close old accounts (even if you’re not using them), it can lower the average age of your credit history and your credit score.
Even with these tips, it can still be difficult to establish a good credit score. If you have past negative accounts, they can remain on your credit reports for up to seven years. This can be long, depending on your perspective and how soon you need to get new credit.
If you start working on your credit score now, the results will start to come. You can check your credit reports weekly until April 2021 due to the coronavirus (after that it goes back to once every 12 months). Take this opportunity to keep track of your spending habits and what is reported, and when it is reported, to work on your credit.
Repair your credit with a car loan
Car loans are installment loans, which have the potential to increase your credit in a number of ways. Since these are long-term loans, with auto loan terms between four and eight years, you can start a good, lasting payment history that can do wonders for your credit if you manage it well.
Having bad credit can make it difficult to find lenders who can approve you for financing because not all lenders can work with people in difficult credit situations. But we know which dealerships are signed up with bad credit lenders here at Auto Express Credit. To be connected with a dealership in your area that has the loan connections you need, complete our free auto loan application form.