Credit Repair removes information that shouldn’t be on your credit reports, so it will stop dragging your credit scores.
However, it cannot delete negative marks whether the information is accurate, timely and verifiable.
You can hire credit repair services – for around $ 100 per month – to handle these tasks and help you. rebuild credit. But whatever a service does, you can also do it yourself.
When Is Credit Repair Helpful?
Credit repair can be useful when you can pay your monthly bills but a bad credit rating Prevents you from qualifying for a credit product, such as a mortgage or car loan, or charges you high interest rates.
How Credit Repair Can Help Your Credit Ratings
Your credit scores are calculated from the information in your credit reports. A federal trade commission study found that about 5% of consumers had errors on their credit reports that could dramatically lower their scores.
That is why it is useful to check and correct your reports. Until April 2022, you are entitled to free weekly credit reports from the three major credit bureaus – Experian, Equifax and TransUnion – by using AnnualCreditReport.com. Plus, NerdWallet gives you free access to your TransUnion report.
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Legitimate credit repair services check your reports for information that shouldn’t be there and dispute it on your behalf. Many of them also check that the information does not reappear. Sometimes information that is accurate but cannot be substantiated should also be deleted, although it can be restored if verified later. An example could be a debt owed to a retailer who is now bankrupt (unless he sells the debt to a Recovering agency which can show ownership).
Among the errors that can be corrected:
Accounts that don’t belong to you.
Bankruptcy or other legal actions that were not yours.
Spelling mistakes, which can mix with negative entries belonging to someone with a similar name – or can mean that positive entries don’t show up when they should.
Negative marks too old to be included.
You pay a monthly credit repair service fee, typically between $ 79 and $ 129, and the process can take several months to a year. You can also pay a setup fee to get started. Some credit repair services claim that you can save as much as the repair costs – or more – because of the lower interest rates you’ll be entitled to with higher credit scores.
It is true that lower rates go to borrowers with higher scores. But it is also true that you can handle the credit repair yourself.
How to fix the problems yourself
You can choose to correct errors yourself, provided you have the time and the will to do so. Here’s how:
Dispute errors on your credit reports: As a consumer, you can dispute errors on your credit reports directly with the three major credit bureaus. All three offices have an online dispute resolution process, which is often the fastest way to resolve a problem.
Work on your payment history: Your record of paying bills on time is most important factor affecting your credit score. If you have late or missed payments, it can lower your score. Bring an overdue checking account as soon as you can and then consider writing a letter of goodwill ask your creditor to remove the mark from your credit reports.
Use less of your available credit: The part of your available credit card limit that you use is known as the credit utilization rate. The lower it is, the better your score. If you can afford it, consider making several small payments during a billing cycle to keep that ratio low and improve your score.
How to choose reputable credit repair services
Hiring a credit repair service is not as simple as outsourcing a job like mowing the lawn. Although there are legitimate businesses out there, the credit repair business is notorious for its scams.
A credit repair company has no rights that you do not have by disputing the information on your credit reports. The FTC warns against using credit repair services that guarantee they can remove accurate negative information or say they can help you establish a new identity using a credit privacy number.
Just as the laws protect you from unfair returns and collections, there are laws to protect you from misleading credit repair services.
The Credit Repair Agencies Act requires companies to give you a three-day cancellation right at no charge, a firm total of costs, and an estimate of how long it will take to get results.
A reputable company should also guide you on how to manage your existing credit accounts to avoid further damage. If, for example, your cards are almost depleted, he should advise you to pay off those balances.