How to Avoid Credit Repair Scams

Credit repair companies can help people with bad credit improve their scores. However, not all credit repair firms are trustworthy, and it is important to make a good choice. Some scam artists are trying to take advantage of consumers with financial troubles. Be wary of companies that claim to improve your credit score in an overnight process. You also want to research the legitimacy of third-party companies before signing up.

Credit repair companies usually begin by contacting your creditors to get more information on negative marks on your credit report. They will then create a dispute plan to remove or correct the erroneous information. In some cases, they may send cease and desist letters to debt collectors.

When a dispute is resolved, the credit bureau will remove the disputed information. In some cases, this process can take weeks or months, so you’ll need to stay in touch. There are free dispute letter templates online to give you an idea of what you should write.

A reliable credit repair solution provider will do a thorough review of your credit report to find errors and items that could hurt your score. Then they’ll decide whether they can improve your score. These providers can provide free credit counseling as well.

When looking for a credit repair company, look for one that has a money-back guarantee. This means that if they don’t fix your credit, they’ll refund your money. Other companies offer a lower monthly rate, but this might not be the best option. That’s because the more expensive tiers of services will handle more complicated issues.

Another con to watch out for is companies that demand a large upfront fee. According to the Consumer Financial Protection Bureau, you should avoid paying for these services until you can prove that the company has completed its work.

It’s also a good idea to check with the Better Business Bureau to see if a company has any complaints against it. If you find a few complaints, consider going with a different company. Also, be sure to read reviews of the company you’re considering to ensure that it is legitimate.

Companies may even sell your personal identification number (EIN) to others who are trying to steal your identity. Lying on a credit application can also be illegal. Therefore, it’s important to keep your information safe and use a secure password.

If you’re having trouble managing your finances, you may want to consider a credit counseling service. Many nonprofit agencies provide credit counseling for free. They can also negotiate better payment plans with creditors to help you get on track.

While many people hire credit repair companies to clean up their credit, there are also a few ways to fix your credit on your own. First, you should pay off any past due accounts. Past due accounts are a big drag on your financial status, so you should try to eliminate them as soon as possible. Second, you should keep your debt-to-income ratio as low as possible. By improving your credit score, you will be able to qualify for new loans and credit cards.