Can Credit Repair Companies Help or Do They Make it Worse?
Many people ask "Can credit repair companies help?" when they are faced with a credit crisis. Find out if these companies help or do more damage to your credit.
You check your credit score for the first time in years – or perhaps ever – with hope in your heart. Then that hope is crushed with a credit score that leaves you in the fair, bad, or even very bad category. Your next thought may be something along the lines of, “I need a credit repair company ASAP!”
Can Credit Repair Companies Help?
Depending on why you’re checking your credit score at this time, you may feel desperate to bring your score up 20 or even 100 points as fast as possible.
Maybe your ability to buy a home or get a reasonable interest rate on a new car is on the line:
- But can credit companies help in this situation?
- The question is, can credit repair companies help improve your credit score any faster than you could do it yourself?
- Even more important, what if a professional credit repair specialist were to make matters worse in the long run?
It’s time to dive into the details of credit repair companies at their worst and best. We’ll also provide a quick checklist to help you select a good credit repair specialist if you decide you need some help along the path to excellent credit. Of course, we’re always here to guide you along the way, whether you go the DIY or paid service route.
When Credit Repair Companies Get It Right
Can credit repair companies help you clean up your credit faster than you can do it yourself?
A good credit repair company will use legal and applicable strategies to your situation. They will come armed with various credit repair techniques, and they will create a customized credit repair plan designed to help you identify and reach your financial goals.
They won’t make a generic, limited approach for every client. They also won’t use shady or unlawful techniques that could leave your credit lower than ever in the near or distant future.
Legitimate credit repair companies will also give you reasonable expectations regarding the amount of change they can bring to your credit score and the length of time it might take to get those results. They won’t over-deliver with big claims of super-fast, amazing results to pry your money from your wallet.
We’ll cover a list of green flags that signal a credit repair company is legit in a moment. For now, understand that credit repair companies can work for you.
7 Common Mistakes Credit Repair Companies Make
Can credit repair companies help you only to make it worse later? Sometimes. When credit repair companies make matters worse rather than better, they often fall into one or more of the following traps:
- They take money from consumers and disappear. We’re talking about scam artists posing as credit repair specialists. They often have unique websites loaded with fake consumer reviews. The problem is everything they say is too good to be true, and your money is gone before you realize it. When credit repair companies ask you to pay for services upfront, they violate the law.
- They use illegal or deceptive practices that may deliver results initially, but those results are short-lived. For instance, some credit repair specialists will file multiple disputes for every negative line of credit on your credit reports.
- The goal is to distract and confuse the credit agencies in hopes of one or more false disputes succeeding at pulling the derogatory information from your report. Sometimes, it works.
- The credit bureaus catch onto the game other times, and the deleted information gets added back to your credit report. You end up with a low credit score again, and the credit repair company isn’t likely to help much without you handing over more money.
- They recommend creating a new identity with a fraudulent social security number or employer identification number, which is known as an EIN. That’s one of the most scandalous and damaging practices sometimes pushed by illegitimate credit repair scammers.
- They oversell their services, inflate expectations, and overplay the complexity of credit repair. They will make you feel like your credit is a lost cause without their help because the process is so tedious and secretive that you will never figure it out on your own.
- The more desperate and hopeless you feel, the more you will likely agree to pay for their help.
In reality, you can repair your credit without paying anyone else. It will take more time as you do the legwork yourself, but never allow a credit specialist or financial counselor to make you feel it’s hopeless without their services.
How to Tell an Effective Credit Repair Company from a Scam
Are you ready for the quick checklist that will help you identify a reputable, effective credit repair service from a scam or ineffective one? Can credit repair companies help? Here it is.
7 Quick Checklist Tips:
- They set reasonable expectations of what they can do to help you. That includes being honest about how much they may boost your credit scores and how much time it may take to see the results. They never promise mind-blowing results in a few days or even weeks.
- They provide a professional contract that clearly states what you will receive in exchange for your money.
- They must allow you time to read the contract before signing, and you should have a copy signed by them and keep it in your records. Make sure the agreement contains their business name and contact information as well as the date(s) on which they will perform each service included.
- They have positive consumer reviews not only on their website but also on other websites. When you Google the service name and dig deep, you won’t encounter a lot of reviews with negative complaints. Few businesses can satisfy every customer, but a string of negative press is never a good sign.
- They fail to give you a copy of the Consumer Credit File Rights Under State and Federal Law. That’s a federal law that gives you the right to check your credit reports and dispute any inaccurate information free of charge. You don’t need a credit repair service to do that, and they are legally required to inform you of your right to act independently.
- They charge reasonable fees and never ask you to make upfront payments for credit repair.
- Credit counseling and other educational resources may require upfront payment, but companies aren’t legally permitted to demand upfront payment for credit repair services.
Do You Really Need a Professional Credit Repair Service? Can Credit Repair Companies Help You?
So, can credit repair companies help you? The answer is yes for legitimate services that abide by all federal laws before you run off to find a service that will do the hard work on your behalf, understand that the credit repair process isn’t as challenging to do on your own as you may think.
With the resources provided for free right here, you could do everything an effective credit repair specialist would do on your behalf. You can even do it in the same amount of time if you focus on doing it without delays.
It all starts with securing a copy of your three credit reports, free once a year at annualcreditreport.com. From there, you can dispute inaccurate or incomplete information and start working to balance the negative with new, positive lines of credit.
Yes, all of that is free as well. Can credit repair companies help? Yes, We’re always here to guide you along the way.