A poor credit score can be one of the most expensive burdens most consumers carry along with them, exposing them to high interest rates on home and car purchases, as well as the combination of higher credit card interest rates and overall limits. of course, these expenses result only when a lender is willing to overlook a poor credit scenario and lend the consumer money despite their past difficulties. Many institutions, especially in an era of tighter credit markets and lower overall revenue, are reluctant to even go that far. This makes it absolutely essential for consumers to take charge of their financial destiny by addressing the causes and symptoms of their credit woes in a head-on way.
For many consumers, the time and effort required to go through a credit report, on a line-by-line basis, can be a bit overwhelming. After all, the credit repair process will involve not only satisfying past due obligations, but also correcting credit report errors, asking for goodwill from creditors, and negotiating a more favorable financial position over the course of several months or even more than a year. With so much to do, many people opt for a credit repair agency that can function as an advocate for the consumer. These agencies negotiate on behalf of their clients with original creditors, collection agencies, and other institutions, helping to create a better credit situation over time.
Choosing a Credit Repair Agency: When it Makes Sense for Today’s Consumers
If a credit score is being dragged down by just one or two accounts, or if there are only a couple of errors to be found on the credit report, chances are high that the consumer can fix their own credit problems without contact a credit repair company. The real impetus to choose a credit repair firm is when a credit report presents a long list of delinquent accounts and negative information. It’s also a good idea to hire a credit repair firm if a large number of errors present themselves on the report, as it will be easier for the firm to deal with credit reporting agencies on behalf of the consumer, rather than the consumer spending their free time calling multiple agencies about their report’s erroneous information.
Typically, there are four main reasons that consumers should choose to pursue a better credit situation with the assistance of a credit repair company.
1. Identifying and Correcting Inaccuracies
A staggering number of consumers are saddled with a negative credit score due largely to inaccuracies present on their report. Whether it’s due to major issues like identity theft, or a company simply reporting erroneous late payments, these inaccuracies can be responsible for the loss of hundreds of FICO score points. Consumers who choose a credit repair agency will be able to use the agency’s service to identify all of these errors, and then pursue their prompt correction via both the original creditor and the credit reporting agency whose report is showing the incorrect information.
2. Delinquent Accounts and Past Due Payments
A more serious cause of poor credit comes in the form of missed and delinquent payments. In fact, a single late payment can affect a credit score for up to two years after the issue is resolved. A series of such late payments can reduce a consumer’s credit score by a hundred points or more. In this case, consumers would do themselves a favor to contact a credit repair company that deals specifically in debt settlement and negotiation. These companies work with creditors to open the lines of communication, enabling an easy debt repayment scenario that will steadily rebuild a consumer’s credit health.
3. Reestablishing Credit After Repair
Many credit repair companies will not only “stop the bleeding” by contacting creditors to negotiate friendly repayment terms or correct errors, but they’ll also help consumers begin their credit journey anew. The best credit repair firms help their clients access secured credit cards and even secured loans, building a diverse selection of revolving and installment products that will guide their score upward. After all, the best way to repair credit is not only to fix old problems, but also to use new credit products to set a new precedent of consistent and timely payments.
4. Issues Relating to Identity Theft
Some credit repair companies lend their expertise to consumers who have been hit hard by identity theft. In this case, the agency will work on behalf of the client to contact their creditors, as well as the reporting agencies, to remove all negative marks associated with identity theft. Furthermore, they’ll help consumers monitor their credit on an ongoing basis, notifying their clients about any changes to their personal information, as well as information about new accounts and other activity that might be associated with continued identity theft problems.
Knowing How to Choose: The Difference Between Reputable Agencies and Scam Artists
Because so many consumers require some degree of credit repair, even if it merely involves fixing innocent errors on a credit report, the market for a credit repair agency is large and growing quickly. Companies of all types have opened their doors to consumers, offering to help with anything from erroneous late payments to a negotiation of debt payments and the near-instantaneous boost of a credit score by large margins. Some of these offers are legitimate, and they’re designed to truly help consumers conquer their past credit mistakes. Many others, though, are agencies that exist only on unrealistic promises and a failure to deliver real results to those they seek to help.
Before choosing any particular credit repair agency, consumers owe it to themselves to do a great deal of research into the company’s process, their past history with credit repair efforts, and the realistic nature of the promises and guarantees that they make to their prospective clients. Furthermore, a thorough look at the fine print is always in order. It is often in the fine print that otherwise reputable agencies hide their miscellaneous fees, surcharges, and other nefarious efforts.
Don’t Believe Unrealistic FICO Score Promises
One of the ways that shoddy credit repair agencies grab consumers’ attention is to offer them a miraculous turnaround in their FICO score within a very short amount of time. Companies guilty of this behavior will typically promise 100-point jumps in as little as 30 days. For consumers who are very down on their luck, that kind of offer is certainly tempting. Who wouldn’t want their score to increase 100 points in just one month’s time?
The truth, though, is that it’s nearly impossible for a FICO score to jump by that many points in that many days. Most often, credit repair services offer their consumers a steady path toward better scores, with incremental increases each month as old mistakes are addressed and newer, better habits take the place of negative accounts. Consumers should look for a company that offers such incremental increases. This more realistic approach will produce solid results and, with a little patience, consumers will find themselves in a substantially improved credit situation over time.
Don’t Believe Promises of Miraculous Debt Forgiveness
There is plenty of room for negotiation with creditors and collection agencies when seeking to improve a credit score, but there is virtually no room for a miraculous forgiveness of current or past due financial obligations. Creditors are in the business of making money, and it’s not in their playbook to let debtors off the hook entirely. Any company that promises the disappearance of troublesome debts is not being honest with their prospective customers, and that should be cause for alarm.
Instead of pursuing the mythical discharge of all debts, look for a company that promises to be an advocate on behalf of their clients when speaking to creditors. Many companies will use their industry connections and vast amount of experience to negotiate lower interest rates, friendlier monthly repayment terms or even a settlement of old debts, which will still be a major improvement for credit-concerned customers. Best of all, these approaches are more honest and realistic. They’re more likely to produce long-lasting, effective results.
Explore the Company’s Website and Find Their Fine Print
Most people will note that a book should never be judged by its cover, but credit repair companies can often be judged in this way simply by exploring the company’s website. A reputable credit repair firm will offer a robust website full of credit information, credit repair guides, and an explanation of the work they do for their customers and how it all gets done. They’ll explain their services and they’ll offer ways to get in touch with company representatives or actual credit repair experts. This is a great way to get a feel for how the company operates, and it’s a great way to judge their overall trustworthiness within the industry.
Many less reputable credit repair firms won’t operate websites that are very useful. They’ll be full of links, gimmicks, and fine print. Many consumers would be hard pressed to find a viable method of conduct for many of these companies, which are more focused on a quick payment of fees than they are in establishing a long-running relationship that is beneficial to both sides of the transaction.
Starting the Process on the Right Foot: What to Have on Hand
Consumers who have done a bit of smart shopping and reading will be prepared to pick the right credit repair company for their needs. Even with the right company selected, though, it’s important for consumers to have a few things on hand, and on the mind, when they speak to their designated credit repair representative. This information will make it easier for both the consumer and their representative to get the credit-boosting results they seek.
Obtain Copies of All Three Credit Reports Prior to Meeting or Speaking
To get a good idea of which of the company’s credit repair services will be needed, consumers should go online to obtain a credit report from the three major reporting agencies. These agencies include Equifax, TransUnion, and Experian, and all three reports are free on a yearly basis. Obtaining these reports is a key way to understand whether there is erroneous information to correct, past due accounts to rectify, or another negative financial information that the company may be able to help with over the course of their relationship with the consumer.
Understand Legal Rights, Responsibilities, and Regulations
Credit repair agencies, credit reporting companies, and creditors themselves, are all subject to thorough government regulations. These regulations are designed to benefit the consumer, whether that comes from projecting the individual’s identity, setting a statute of limitations for debt collection and debt reporting, or regulating the way credit repair companies work on behalf of those they represent.
Consumers who know their legal rights and responsibilities will be able to more effectively repair their credit, and they’ll be prepared to work with their credit repair representative in a team fashion. Understanding things like the Fair Debt Collections Practices Act, the Fair Credit Reporting Act, and others, can be a real asset during repair activities.
Use the “Ready to Walk” Mentality When Meeting with Credit Repair Companies
Whether via phone or in person, credit repair companies will often meet with a client before they begin to work on their behalf in the pursuit of a better credit picture. They’ll explain how they can help, what they’ll do in pursuit of better credit, and how the company will charge for those services. If, at any time, the business seems suspect or the company doesn’t seem to be a perfect match, consumers should be ready to walk. There is no shortage of reputable credit repair companies who will make their customers feel important, safe, and proactive.
With Careful Shopping and Comparing, Credit Repair Can Become a Reality
Consumers looking into credit repair services owe it to themselves to participate in a careful comparison shopping process, looking at the prices, fees, processes, and fine print, that come with choosing any credit repair company. By making sure that the finer details are understood and acceptable, consumers will be able to guarantee an incrementally better credit situation without the hassles and setbacks that can come from an unrepeatable partner in the process