Credit repair services will help you fix errors on your credit report for a fee, but it’s easier than you think to do it yourself.
credit repairAgencies can help you remove incorrect information from your credit reports, for a fee. But you can also file a credit report dispute on your own, for free.
- These companies usually give you access to your credit report for an additional fee, but you can get your credit report for free every week until April 2021.
- Remember that credit repair services are not miracle workers; they can’t wipe late payments off your report if you actually paid your bills late.
- Consider alternatives to credit repair, such as repairing your credit on your own, working with a credit counseling agency, or using a debt consolidation loan to get your finances back on track.
If your finances aren’t where you want them to be, it’s easy to let your
If you find yourself in a position where it seems like nothing is right with your credit, you may be wondering if you need help from a third party. Credit repair companies promise to help you fix any errors on your credit report, but before you sign up, it’s important to know what they can and can’t do.
What is a credit repair company?
According to the Federal Trade Commission (FTC), consumers hire credit repair companies to help them figure out what went wrong with their credit and to investigate any errors that might appear on their credit reports. However, these companies cannot remove negative information from your credit report if it is accurate. All they can do is determine what the errors are and then help you take the necessary steps to correct the errors so they can stop damaging your credit score.
Lexington Law, a credit repair company that also offers legal advice, says the expertise of credit repair companies is what makes the process easier for consumers. Credit repair companies “know what to look for, understand the process needed to correct inaccuracies, and are knowledgeable about what customers are legally allowed to request from credit bureaus and creditors.”
Although consumers can research credit report errors on their own, professional help could make the process easier and less stressful. After all, not all consumers are credit literate, and having a hand through the process may even be necessary to keep some consumers on the right track.
Credit repair versus credit counseling
Lexington Law also says that credit repair should not be confused with credit counseling. Credit repair companies tend to be for-profit agencies that will help you repair your credit for a fee, while credit counseling agencies are generally not-for-profit companies that help consumers create a plan. to get out of debt and recover their finances. on track.
However, the FTC notes that you should be aware that nonprofit status does not mean services are free, and some credit counseling agencies charge high fees or require their clients to make voluntary payments. . With that in mind, you should make sure you know all of the upfront fees involved with any service you seek while you work to repair your credit score.
What to consider before using a credit repair company
The most important thing to consider when it comes to credit repair is that, no matter what, credit repair companies can’t do anything for you that you can’t do for yourself.
The FTC points out that “only time and a personal debt repayment plan” can really improve your credit. Credit repair agencies can help you remove incorrect information from your reports, but you can also do it yourself.
If you decide to work with a credit repair company, you need to know these details in advance:
- The FTC notes that it is illegal for credit repair companies to lie about what they can do for you.
- It is illegal for credit repair companies to charge you before providing you with help.
- You have the legal right to a written agreement in writing before they provide services.
- You also have the right to know the exact costs you will pay, the time it will take to get results and any guarantees.
- You have three days to terminate the contract free of charge.
If a credit repair company fails to perform the services it promises, you have the right to sue them for your losses and seek punitive damages. You also have the right to join a class action lawsuit against any credit repair company you work with.
How much does credit repair cost?
You may want to work with someone who can help you repair your credit, but be aware that you could end up paying large sums over time. Not only can you expect to pay a monthly fee while you receive credit assistance, but other upfront fees may also be charged to access your credit reports or to begin work.
While credit repair company fees can vary, here are some of the more popular companies you can work with, and how much you can expect to pay:
|Monthly fee||Other expenses|
|CreditRepair.com||$99.95||$14.99 credit report fee|
|Lexington’s Law||$89.95 to $129.95||N / A|
|oak credit repair||$85||N / A|
|Apex credit fix||$99||$1 credit report fee|
|CreditUS||$99||$99 first job fee; $48 for credit reports|
Should you hire a credit repair company?
Only you can decide if working with a credit repair company is worth it. However, it may be wiser to take the necessary steps yourself to remove negative information from your credit reports. After all, credit repair costs vary, but this help is never free.
Most companies charge a monthly fee as well as an upfront cost to get your credit reports, and monthly fees can be as high as $100 with the most popular agencies. You are also entitled to get your three credit reports each week for free from AnnualCreditReport.com until April 2021, so there is no need to pay for this service.
While it’s possible to remove negative information from your credit reports if it’s incorrect, you probably won’t be able to remove negative information from your reports if the data is correct. For example, you can’t make a late payment disappear if you really paid a late bill and that information was reported to the credit bureaus. Only time can make true negative reports go away, notes the FTC.
In fact, most negative reports stay on your credit reports for seven years, but bankruptcy will stay on your report for 10 years. “Unpaid judgments against you will remain on your report for seven years or until the statute of limitations expires, whichever is longer,” the FTC reports.
How to dispute an error on your credit report
If you get a copy of your credit reports and find negative information that is incorrect, you can dispute it yourself. To dispute incorrect information on your credit reports, you must follow these steps:
- Contact the creditor (such as your bank) who reported the negative mark on your report to try to resolve the issue
- If you are unable to resolve the issue with your creditor, contact the credit reporting company that issued the report with the inaccurate negative rating.
- You will want to send the credit reporting agency a letter using this format provided by the FTC
The FTC says credit reporting agencies are required to investigate the items you dispute within 30 days, unless they determine your dispute is frivolous or unwarranted.
Consider alternatives to credit repair
You should also consider other options to repair your credit if you have room for improvement. This can include the do-it-yourself method, which involves creating a plan to get your bills under control and pay off your debts over time.
To help you repair your credit on your own, you should make sure all your bills are paid early or on time, work to repay all defaulted or collected debts, and pay off your debts to reduce the use of your credit. You should also refrain from opening or closing too many accounts while trying to improve your credit score.
Read more: How to Maintain Your Credit Score When the Economy Seems Uncertain
Also consider debt consolidation, which is getting a 0% APR debt consolidation loan or credit card that allows you to pay off your debts at a lower rate, at least initially. Finally, consider contacting a credit counseling agency who can help you design a plan to pay off your debts and change your lifestyle to avoid taking on more debt in the future.
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