Do I have to pay for credit repair before getting a car loan?

A negative rating on your credit reports can last for seven years or 10 years. If you’re considering paying for credit repair to improve your chances of getting car loan approval, your final decision will depend on several factors, including how much work you want to do yourself. Let’s explore some things about credit repair you should consider, including options other than spending your hard-earned cash.

Request your credit reports

First, request your credit reports from Equifax, Experian and TransUnion, the three major credit bureaus. You are entitled to one free report from each agency every 12 months. Using these reports, you can identify negative marks that could be hurting your credit score.

A bad credit score can affect your ability to get approved for a car loan. Lenders are reluctant to approve borrowers with poor credit scores because your credit score is based on your credit account payment history.

Even if the negative ratings are inaccurate or outdated, it doesn’t matter. If they appear on your credit reports, they lower your credit score. If you find negative marks that you don’t recognize, accounts that have already been resolved, or duplicate negative accounts, you can file a dispute to have them removed, which should improve your credit score.

What is a credit dispute?

You can file a dispute with creditors, collection agencies, and credit bureaus regarding accounts you believe are incorrect.

Once you tell them you’re disputing an account, they have 30 days to investigate and act on it, starting from the day you file the dispute. All three major credit bureaus also accept online disputes.

To expedite the process, contact the credit bureau that listed the incorrect information and the organization that sent the information to the bureau. If you are going to dispute an account, you must have proof that it is wrong and send that proof to the collection agency or creditor.

For example, if there is an overdue account shown on your reports that you have paid, you can dispute it and prove that the account is paid with receipts, bank statements and/or other supporting documentation.

If the creditor or collection agency doesn’t agree with the dispute, or if you don’t provide documentation to prove the information is wrong, the investigation may be dropped and the information remains on your reports.

Credit Repair Companies and How They Work

In short, credit repair companies dispute inaccurate accounts for you so you don’t have to. However, you must provide documentation to the credit repair company so that they can have the information removed.

As for the cost, some credit repair companies charge a start-up fee, and most charge a monthly fee to contact creditors to dispute your accounts for you.

Since filing and following up on disputes can take time and effort, a credit repair company can be a good alternative to doing all the work yourself. Credit repair companies can also help make deals with debt collectors, such as payment for deletions.

This is an agreement between you and the creditor that you will pay the outstanding balance if it is removed from your credit reports. However, creditors and collection agencies are often hesitant to accept this.

Credit repair companies also know the laws, including the Fair Credit Billing Act, Fair Credit Reporting Act, and Fair Debt Collection Practices Act. By using these laws and understanding what’s right in your credit reports, they might be able to spot things you didn’t notice during your initial review of your credit reports.

If you want to hire a credit repair company, check out our trusted partner for more information on how to get started.

Can I repair my credit myself?

The short answer is yes. You can dispute the accounts yourself. If you have the time to contact collection agencies, creditors, and comb through your credit reports for errors, you absolutely can fix your own credit.

If you only have one or two errors and you have documentation to prove them incorrect, it may be in your best interest to handle it yourself. But if you find yourself buried under multiple errors because someone stole your identity, or if you have multiple collection agencies contacting you, a credit repair company could help you cope with the workload.

Other Ways to Improve Credit

If you’ve gone through your credit reports and everything is correct but your credit score isn’t the best, a subprime auto loan could help. Subprime lenders assess more than your credit score to determine auto loan approval. An installment loan like this can help your credit, as long as you make payments on time and establish a good payment history.

If you have bad credit and need a car loan, we want to help. To Auto Express Credit, we have partnered with dealers across the country with special finance departments. To see if there’s a dealership in your area who could help, fill out our free auto loan application form.

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