May 15, 2020

credit repair company

Your credit score can impact your finances in a variety of ways. In addition to impacting your loan qualification and interest rate, the FTC says that your credit can also affect your eligibility and the price you pay for rent, phone service, insurance, and utilities.

If you recently checked your credit score and it was lower than you expected, you could have one or more errors on your credit report that are pulling it down. If that’s the case, you have a few options to fix the mistakes. One of those options is to hire a credit repair company.

But what is it exactly that credit repair companies do? And are they worth the price? Here’s what you need to know before you decide to work with a credit repair company.

What is a Credit Repair Company?

A credit repair company is a business that handles the tasks associated with fixing your credit. Over time, their goal is to fix your credit score within the scope of the law.

What Does a Credit Repair Company Do?

Your credit repair company will start by reviewing your credit report. They’ll look at the various factors impacting your credit score, including:

  • Negative items
  • Erroneous accounts
  • Incorrect information
  • Aged debts

Essentially, they’ll take a look at anything that could be negatively impacting your credit score and determine whether it should be there or not. They’ll use this information to start reaching out to regulatory bodies and creditors to file disputes.

It’s important to understand that these companies aren’t doing anything that you couldn’t do yourself with the right research and time commitment. While industry knowledge plays a role, there’s no secret sauce here. You’re delegating a task to the experts, as you would for numerous other things.

While it’s important to understand what a credit repair service does, it’s more important to understand what they don’t do. A credit repair service can’t fix your credit score overnight, nor can they remove things that belong there. In other words, if you haven’t been paying off your credit card for the past year, they can’t fix that for you. If a repair company is telling you that they can magically fix your broken credit score, don’t hire them.

What to Look for When Choosing a Credit Repair Company

One thing to look for when choosing a credit repair company is proven results. You want an organization that’s been around for a while and has social proof in the form of testimonials and recommendations.

As credit repair is seeing a recent surge in popularity as a business opportunity, there are a lot of fly-by-night businesses popping up. Take some time to read about your rights under the Credit Repair Organization Act before choosing a service. Make sure there haven’t been any complaints filed against the company with the Consumer Financial Protection Bureau (CFPB) and check their Better Business Bureau rating.

A reputable company will have a system in place that shows you what they’re doing over time to fix your credit. They’ll be open about their practices and procedures. Finally, look for a repair business that prioritizes the importance of prevention and financial health going forward.

Should You Use a Credit Repair Company?

The choice to use a company to handle your credit repair is personal and subjective. There are alternatives to reaching out to a company to handle the dispute process for you. You can:

  • Use credit repair automation and tracking tools to manage your own dispute process
  • Let aging items fall off naturally when they should
  • Focus on building better credit for the future, rather than focusing on the past
  • Offer settlements to creditors, paying less than the full amount to have them remove the item.

If you’re being pressured or hassled by creditors, you can also talk to an attorney that specializes in unfair debt collection practices to have the situation handled.

Ultimately, using a credit repair company will cost you more money than DIY credit repair. However, if you believe you need this service to help you on the road to financial independence, it could be worth booking a free consultation with a reputable service.

About The Author

Ashley Lipman is an award-winning writer who discovered her passion for providing knowledge to readers worldwide on topics closest to her heart – all things digital. Since her first high school award in Creative Writing, she continues to deliver awesome content through various niches touching the digital sphere.

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