Alternatives to Credit Repair
People with bad credit have a harder time getting approved for loans (mortgages, auto-loans), and can face higher interest rates on the debt they do get approval for. This can make life difficult, especially if you’re already struggling financially.
That’s why many people turn to credit repair companies, which often promise to fix your credit for a fee. However, before you hand over any money to a credit repair company, consider the alternatives. While it may take more effort than relying on a credit repair company, you can still work to improve your score by yourself. For instance, you can start by disputing errors on your credit reports and focusing on paying bills on time. Additionally, it can be helpful to avoid new debt and limit your credit utilization, which is the amount of credit you use compared to the total amount of credit you have available.
If you’re having difficulty managing your money, you can also find free or low-cost credit counseling with a non-profit organization like the National Foundation for Credit Counseling or the Consumer Financial Protection Bureau. These counselors can walk you through budgeting and help you create a plan to tackle debt. They may also suggest strategies to increase your credit score, such as a secured credit card.
Lastly, you can also try to change the status of delinquent accounts, such as negotiating with creditors to have them mark your account as “paid” or “settled.” This will stop the negative marks from damaging your credit further. However, it’s important to note that this won’t remove any stains from your report and will likely still impact your score for years.
Overall, credit repair is possible for those willing to spend the time parsing their three major credit reports and disputing any mistakes that might be on them. However, the Federal Trade Commission has put in place the Credit Repair Organizations Act to protect consumers from predatory credit repair services that charge upfront fees and then don’t deliver on their promises.
If you want to hire a credit repair service, look for one that charges an upfront fee of no more than $50 and doesn’t guarantee results. Also, be sure to read reviews of any company you’re considering working with to ensure they follow the CROA. And, as always, don’t hesitate to contact the Federal Trade Commission if you suspect any violations of the CROA. You can also file a complaint with the agency if you feel you’ve been defrauded by a credit repair service.
