Is your credit less than perfect? If it is, you probably have extensive firsthand experience attesting to the fact that poor credit detracts from every aspect of your financial situation. You can’t get a loan for a house, so you pay more to rent an apartment. The terms of your auto loan — assuming you have one — are so unfavorable that you pay more per month for an older car than some people pay for cars from the current model year. Having poor credit creates a terrible state in which you’re constantly paying more than what people with good credit would pay for the necessities of life. Since you’re forced to overpay — or do without — it sometimes feels as though you’ll never get ahead.
If you’ve left your financial instability in the past, there is no reason why you should have to continue living as though you don’t have the ability to pay your debts. Credit repair companies exist to help people like you get back on track. The credit repair process can result in the removal of outdated and inaccurate items from your credit report. Over time, credit repair can improve your credit score, enable you to get loans with more favorable terms and help you keep more of your money where it belongs — in your bank account.
Does Credit Repair Really Work?
Although it is impossible to guarantee the results that any individual will receive from the credit repair process, credit repair absolutely works for most consumers. It’s likely, for example, that your credit report contains errors. Even if you’re certain that you’ve made some mistakes in the past, some of the negative items on your credit report may have no basis in fact. In 2013, the television program “60 Minutes” reported that as many as 40 million Americans may have errors on their credit reports.
Every day, credit repair companies find errors in the credit reports of people just like you. A credit repair company disputes those errors on your behalf — following the processes that the different credit reporting agencies require — and tracks the results to ensure that your disputes receive the research and timely responses to which they are entitled. The credit reporting agencies are extremely powerful, and the law gives consumers ample protection to ensure that they don’t receive unfair treatment. A credit repair company simply assists with the process of invoking the legal protections to which you are entitled.
How Does the Credit Repair Process Work?
The law provides you the ability to examine your credit reports and dispute items that you believe are in error. When you file a proper dispute, the credit reporting agency must review your dispute and provide a timely response. In most cases, the agency must respond to your dispute in 30 days or less. If the agency doesn’t respond in time — or fails to produce documentation substantiating the item on your credit report — the agency must remove the item. You do not need to hire a credit repair company to dispute negative items on your credit report. It may even be wise to attempt credit repair on your own if you have a short credit history or plan to dispute only one or two items.
Although you can go through the credit repair process alone, many people find it helpful to hire credit repair companies because writing a truly actionable credit report dispute is more difficult than you might think — and credit repair companies know how to write actionable disputes.
How Much Does Credit Repair Cost?
You can expect to spend around $80-120 per month for credit repair services. The cost depends on factors such as the complexity of your case and the number of negative items that you intend to dispute. The good news, though, is that you’ll know right away whether a credit repair service is worth the cost. By law, a credit repair company cannot charge a fee before rendering services.
As we mentioned above, a credit repair company doesn’t do anything that you couldn’t do on your own. However, the credit repair process also requires a great deal of time and personal involvement if you intend to do it alone. Many people find that they can better utilize their time in other ways, so they pay credit repair companies to do the work for them.
What do you get when you pay for credit repair services? You get actionable disputes that the credit reporting agencies understand and can adequately research. The credit repair company sends certified mail on your behalf, so you’ll always have a paper trail if you need to push a credit reporting agency for a removal because they haven’t responded to a dispute in a timely fashion. Most importantly, you’ll get a simple, intuitive interface that allows you to minimize the time spent on analyzing credit reports and choosing what to dispute.
What to Consider Before Choosing a Credit Repair Company
The most important feature of any credit repair company is that it adequately represents what it can and can’t do for you. You have the legal right to dispute negative items on your credit reports, and a credit repair company can help you through that process. No credit repair company can guarantee a specific result because every person’s case is slightly different.
A credit repair company should also have the flexibility to allow the specifics of your case to come through in your disputes. It is your right to dispute every negative item on your credit report if you like. If a credit repair company disputes items frivolously and attaches the same letter to each dispute, though, the credit reporting agencies may not investigate the disputes at all. A credit repair company should encourage you to dispute items that you truly believe are inaccurate, and the company should provide a way for you to attach any supporting documentation that you may have.
Lastly, the credit repair company should thoroughly explain its dispute process to you. What material does the company send with each dispute? Who will receive responses from the credit reporting agencies? Who will be responsible for following up if an agency fails to respond within 30 days? What types of items will the company dispute on your behalf? You should have a complete understanding of a credit repair company’s workflow for processing disputes before you become a client.
What to Find Out About a Credit Repair Company Before Choosing One
1. What do other clients say about the company?
Before becoming a client of a credit repair company, it’s a good idea to learn about the experiences of other clients through a resource such as the Better Business Bureau. Remember that some people will complain simply because the dispute process didn’t increase their credit scores — but no credit repair company can guarantee results. It’s more important to ensure that a credit repair company is transparent about its process and adheres to its customer service policies. The fact that a company has hired a good SEO firm and appears first on Google’s search results doesn’t always mean that the company provides the best possible services.
2. What will the company do for you before you pay?
Remember that the law requires a credit repair company to perform a service before you pay. Find out what the credit repair company offers to new clients. It should be something more than free copies of your credit reports; the law already entitles you to one free credit report from each reporting agency per year.
3. Does the company provide clear contact information?
If a credit repair company only allows clients to contact them through web forms, you may have difficulty resolving problems or obtaining answers to questions about your account. A credit repair company should provide its physical address and phone number.
4. What forms of payment does the company accept?
If a credit repair company doesn’t accept credit cards, it’s likely that they’ve experienced a high number of chargebacks and have lost their merchant account as a result. Payments via check, money order, bank account transfer and check by phone are difficult to dispute in the event that you don’t receive the services you’re promised. Likewise, you should steer clear of any credit repair company that demands a post-dated check as payment. That’s merely an attempt to sidestep the law requiring the company to render a service before demanding payment.
5. How many items will the company dispute per month?
A credit repair company has a swift and streamlined dispute process, but someone — often a paralegal — will still have to verify, mail and track your disputes. Your monthly membership fee doesn’t just cover the cost of access to the company’s online platform — it also covers someone’s wages. A credit repair company can only dispute so many negative items per client before that client becomes unprofitable. You should know your limit before you pay.
6. What is the company’s track record?
No credit repair company can promise specific results to prospective clients. However, it is helpful to know how long a company has operated, how many clients they have served and how many negative items they have successfully removed from clients’ credit reports. If a credit repair company has done business for many years and enjoys successful relationships with its clients, you can be certain that the company will give you the best possible chance of success.
7. Does the company offer a credit monitoring service?
If you have open accounts, your credit reports are constantly changing. Whenever you make a timely payment, the lender should relay that information it to the three credit reporting agencies. Your credit reports may also change when negative events occur. If an error suddenly appears on a credit report — or you are a victim of identity theft — the negative repercussions to your credit will be swift and drastic. You’ll need to act quickly to mitigate the damage. If you’re already paying a credit repair company to obtain your credit reports periodically, the company should know if a new negative item appears on a report. Ask if the company provides real-time alerts when negative items appear on their clients’ credit reports.