Why and when do you need a credit repair lawyer
Run a quick Google search for “credit repair” and you’ll see all kinds of great options pop up. Many make wacky guarantees about what they can do for your credit score. But are these claims valid? And should you ever trust companies that make such claims? Let’s dive in and explore why and when you might need a credit repair lawyer.
Errors on your credit report
One of the most common problems that you will see talked about on credit repair lawyer websites is the problem of errors in your credit report. And that’s true. Many consumers’ credit reports contain inaccurate or erroneous information. A study by the Federal Trade Commission has shown that more than one in five consumers have an error in their file that could impact their credit rating.
Mistakes can be a problem. And they can happen for many reasons. Sometimes someone else’s information is classified as yours. Sometimes you have been a victim of identity theft without knowing it. And other times, the moving parts of your credit report have caused duplicates or other errors. For example, if an account goes into collection, it may bounce to different companies, resulting in duplicates on your credit report.
Credit repair lawyers will often tell you that you need to hire them to correct these mistakes. But the truth is that every credit reporting bureau has a process for reporting and correcting errors. It is simply a matter of gathering the appropriate documentation, filing it and diligently following it up.
Want to see exactly what it looks like to correct errors on your credit report? Check out this handy article. Of course, a lawyer could do a lot of this on your behalf if you give them permission, for a fee. But you can also do it yourself without spending so much extra time. Either way, you will need to collect the documentation on your end.
Bad decisions weigh you down
What if your credit is bad because of bad financial decisions you made? Today’s credit scoring algorithms are increasingly adept at determining who is really doing good financial behavior and who is definitely not. So if you are constantly making payments a few days late or accumulating credit card balances, it will eventually catch up with you.
Risky financial behavior can lead to a low credit rating. And that can make it difficult to get a decent interest rate on a loan or to get a loan at all.
But there’s not much a credit repair lawyer can do about it. If you keep making bad choices, your credit rating will continue to drop. The key to reversing this pattern is to control your own behavior. This includes:
Doing these things consistently will naturally lead to an increase in credit score. And there is nothing a credit repair lawyer can do to help you with this process unless they also offer financial advice and accountability. (Which they usually don’t!)
An easy step that you can take to increase your credit score is to sign up for Experian Boost â¢. This service can take your positive payment history and use it to increase your FICOÂ® score. This means that when you pay your utility or cell phone bill on time every month, your FICO score can be increased. Learn more about it and get started now for free here.
Experian Boost Disclaimer – Results may vary. Some may not see improvement in scores or chances of approval. Not all lenders use Experian credit files, and not all lenders use Experian Boost impacted scores.
Related: Experian Boost Review – Improve Your Credit Score For Free
What about bankruptcy?
Some credit repair lawyers will say they can help you remove bankruptcy from your credit report faster. But this is outright false. Some companies use illegal techniques, such as giving you someone else’s social security number to borrow. (By the way, it’s not credit repair. It’s identity theft.)
But apart from getting rid of your Social Security number (again, it’s illegal!), There’s nothing anyone can do to get rid of that bankruptcy filing. It will eventually disappear from your credit report, as all those bad records do. And in the meantime, you can still boost your credit score by cultivating the good habits we talked about above.
You can pay a lawyer all the money in the world, and they won’t have the power to make that bankruptcy go away any faster.
DIY credit repair: time for money
I’m not saying all credit repair attorneys are scamming, although some certainly are. But what you are really negotiating when paying someone else to improve your credit score is money for time. Often a lot of money for something that doesn’t cost you a lot of time.
Let’s say you find an account on your credit report that has been paid off, but it’s listed as open and past due. This probably has a terrible negative effect on your credit score.
If you go for DIY, you will need to gather some paperwork on when you paid the account. Then you will need to file a complaint with the credit bureau (s) reporting the wrong account. And then you will probably want to call the creditor listed there and work with them to clear the error. After you have gathered all your information and your file, you will wait. Credit reporting companies generally have 30 days to respond to you.
If the credit bureau calls your claim frivolous or refuses to change things despite your documents, you can call a lawyer. But this is unlikely if you can prove that you paid off the account in question.
On the other hand, you can start with the avocado. You will need to do your research first to find a reputable one. Then you will need to explain the situation and gather the necessary documentation. Then the lawyer will file this information on your behalf, and you will still be waiting.
All in all, you don’t save a lot of time using avocado. But you probably paid them a high fee for the minimal service they offered to complete a form letter to the credit bureau and your creditor.
Nonprofits can help
What if you’re just struggling, overwhelmed, and don’t even know where to start to repair your credit? In this case, you may be eligible for help from a genuine non-profit organization that offers financial advice and coaching.
Reputable nonprofits often offer services like budgeting assistance and credit counseling. It can help you figure out how to get on top of your financial habits. An advisor can also help you know where to start to repair your credit or correct mistakes and can walk you through this process.
And if you meet the income requirements, nonprofit legal aid agencies may even be able to add weight to your error of credit letters. Sometimes if your creditor or a credit bureau is reluctant to work with you, sending an impressive letter from a lawyer can be helpful. But you may not have to pay lip service to such a letter. Instead, start by seeing if there are any nonprofit legal aid options in your area that might help you.
Don’t always avoid lawyers
For the most part, you should at least try to solve your credit problems on your own. Because most of the time, even correcting errors in your credit report is pretty straightforward. However, if the going gets tough or you find that creditors or bureaus are resisting your efforts, you may need to call in for backup.
If so, just make sure you do your due diligence so that you don’t spend a lot of money on a lawyer who doesn’t do much to help you. Here’s what to look for if you decide to hire a credit repair lawyer:
- Look for a company that shows you how to do it yourself. If a credit repair company doesn’t first ask you if you’ve tried the DIY approach, they aren’t really there to help. Ethical companies will tell you to work on simple issues yourself first.
- Make sure it doesn’t sound too good to be true. Companies that offer a specific increase in your credit score in a short period of time are not telling the truth. Credit scores are far too complicated to make these kinds of claims. So if that sounds far-fetched, they’re probably selling an Arizona beachfront property.
- Don’t pay up front. The FTC actually prohibits companies from pre-billing credit repair services. So stay away from any contracts that require payment before the company does anything for you.
- Read the contract. As always, be sure to read the contract carefully so that you understand exactly what services you are and are not going to get from the credit repair lawyer. Make sure you pay a reasonable fee for reasonable services.
- Make sure they explain everything. A good credit repair lawyer understands how credit works and what the credit repair process looks like. Ask for an explanation of what exactly they will be doing on your behalf so you know what’s going on all the time.
The bottom line is that 99% of the time you can do your credit repair yourself. And 100% of the time, you should at least try to do it yourself the first time. But if you are experiencing resilient creditors, identity theft, or complicated situations, a reputable credit repair lawyer could help you fix your credit score a little faster and with less of a headache on your part.