Credit repair companies can help you improve your credit. Getting rid of negative items on your report can lower your borrowing costs and free up money to spend on the things you need. However, there are some red flags to look for before deciding on a company.
The Consumer Financial Protection Bureau (CFPB) has warned consumers about shady tactics used by credit repair companies. These con artists often use loopholes to charge consumers for services that are incomplete or not worth the cost.
When searching for a credit repair company, be wary of those that promise to improve your credit in an overnight manner. In the best cases, repairing your credit will take three to six months. Those who are in a financial crunch should consider using a credit counseling agency, as they will be able to negotiate a more affordable payment plan for you.
If you do decide to use a credit repair company, make sure you understand the fees and what is included in your package. Some companies charge an upfront fee, while others will charge a monthly fee. You should also ask whether they offer a money-back guarantee.
If you have recently been denied a loan or credit card, it may be time to consider repairing your credit. Many lenders will need to see a credit report to determine if you are qualified for a loan. A bad credit score can prevent you from getting approved, which can result in higher interest rates and a poorer overall financial picture. While you are in the process of improving your credit, try to pay down any past due accounts. Not only will this raise your credit score, but it will send a positive signal to creditors.
The process of repairing your credit involves disputing inaccurate or outdated items on your credit report. This can be done on your own or with the help of a credit repair company. To do this, you must provide proof that the information is incorrect or out-of-date. After a dispute is filed, you will be notified in writing about the results of the dispute.
Before signing up with a credit repair company, check customer reviews to see if other people have had success with them. They should not demand an upfront payment, nor should they be exorbitant in their prices.
There are also ways to repair your credit without paying. For example, you can ask your creditors to dispute an error on your credit report, or you can ask the credit reporting agencies to remove any inaccurate entries.
It is important to note that credit repair companies cannot legally make untrue statements on your behalf. This is because the laws governing identity theft and credit reports vary from state to state. Using a stolen Social Security number is not a good idea.
Depending on the company you choose, you will also need to fill out paperwork. Using false information on your application for a loan or credit card is a federal crime.