What Is Credit Repair?
Credit repair is a service that aims to help consumers clean up their credit report by disputing inaccurate information with the three major credit bureaus. Credit repair companies also offer strategies to improve consumers’ financial future by offering budgeting and counseling services. The cost of credit repair varies depending on how complex the case is and how many items are being disputed. A good credit repair company should be able to explain the fee structure before any work is started.
Credit reports are used to determine an individual’s creditworthiness by calculating their credit scores, which are used by lenders to gauge how much of a risk they would take on a loan applicant. People with higher credit scores are usually considered to be less risky than those with lower scores and are thus able to obtain loans with better interest rates.
Inaccurate information on a credit report can negatively impact a person’s credit score, and it is important for borrowers to review their reports regularly. A credit repair service can be helpful for those who are struggling with negative marks on their report that may be inaccurate, such as missed or late payments. These companies can help borrowers dispute errors with the credit bureaus and the agencies that provide the erroneous information to the bureaus.
The credit bureaus must investigate all disputes and correct them within 30 days, but results are not guaranteed. Sometimes, a removed item can reappear on a credit report due to an error in the reporting system or because a lender decides to re-report an account that has been paid off. It is important to check the Consumer Financial Protection Bureau’s (CFPB) record of complaints against credit repair companies before paying for their services. The CFPB also lists red flags to watch for, such as credit repair firms that request or demand upfront payment.
While credit repair companies can help borrowers with inaccurate information, they aren’t able to remove any blemishes from a person’s credit that are accurate. Negative marks such as late payments, collection accounts and liens can remain on a credit report for up to 10 years.
Despite this, credit repair companies can still be a worthwhile investment for people who want professional assistance disputing inaccurate information on their credit report. These services can be especially useful for borrowers who have been denied credit by multiple lenders or those who have been declined for loans due to poor credit.
The amount of time it takes to do credit repair varies widely, and many people are not able to complete the process on their own without assistance. A credit repair company can be a valuable resource for people who are looking to improve their credit score before applying for a mortgage or auto loan, or when seeking employment. People should be aware of the fees associated with credit repair services and be sure to research any company before signing up. Credit repair companies shouldn’t charge any upfront fees and should only be paid after they have completed the services they promise.
