Credit repair is a process that helps consumers clean up negative items on their credit reports and raise their credit score. Often, this involves negotiating with credit bureaus and reporting companies to remove harmful marks such as bankruptcies, charge-offs and tax liens.
Credit cards, auto loans and mortgages are the most common types of debt that consumers seek to repair their credit for. The goal of credit repair is to re-establish the consumer’s credit history and raise their credit scores in order to qualify for better financial opportunities down the road.
The credit repair process can be time-consuming and tedious, so it’s important to make a plan for how to proceed. Ultimately, though, credit repair is an ongoing process that requires discipline on your part to ensure that your credit report remains clean and free of negative marks.
Typically, credit repair is done through the assistance of a third-party company that will review your credit report for any inaccurate or negative items. These firms then dispute those items on your behalf and try to get them removed from your report.
A company that offers this service typically charges a fee of between $10 and $100 to help you with the entire process. This fee is a small price to pay for the peace of mind that comes with having your credit report under control.
Many companies offer a variety of credit repair services, so you should be able to find one that suits your needs. Some offer services like removing derogatory information from your credit report, while others focus on repairing your overall credit score and helping you develop a long-term financial plan to improve your finances.
Some of these credit repair services will also help you negotiate with creditors to reduce your payments or extend the terms of your loans. This is a great way to start repairing your credit and will eventually lead to lower interest rates and better loan terms in the future.
Other credit repair services include offering budgeting and financial counseling, as well as helping you create a debt management plan (DMP). These are a great way to get a grip on your debt and start building a positive credit history.
Another option is to take out a credit building loan, which can help you rebuild your credit score in the short-term. This type of loan is repaid through monthly payments and typically comes with an interest rate that’s lower than what you would pay on a traditional credit card.
It’s also a good idea to pay off past due accounts such as overdue credit card debt. This can help you re-establish your credit and improve your credit utilization ratio, which is measured by the balances on your revolving credit accounts compared to the credit limits of those accounts.
The key is to establish a regular, disciplined payment schedule and stick to it. Keeping up with your payments will show creditors that you can be responsible and manage your money.