Credit repair is a process that helps consumers remove negative information on their credit reports. This can help raise a person’s credit score and make them more eligible to borrow money at better rates. However, the process can be difficult and expensive.
There are many credit repair companies out there, some of which are legitimate and others who may be scams. You should be sure to do your homework before signing any agreement with a credit repair service and check with the Consumer Financial Protection Bureau and the Better Business Bureau.
The Best Credit Repair Services
A reputable credit repair service will do its best to resolve any issues and improve your credit. These companies can also provide counseling to help you make sound financial decisions and keep your credit score healthy.
These companies will usually start by obtaining a copy of your credit report from the three major credit reporting agencies — Experian, Equifax and TransUnion. They then look for bankruptcies, charge-offs, tax liens and other derogatory listings.
They will then develop a plan to dispute these items and negotiate with the credit bureaus to remove them from your report.
The amount of time it takes to successfully dispute these items varies from credit bureau to credit bureau. Once the credit bureau confirms that the item is incorrect, it will be removed from your credit report.
Some credit repair services are relatively affordable and offer a refund policy. Ovation Credit Repair, for example, offers two plans and a number of discounts to make its services more accessible.
You can find a credit repair company near you by performing a Google search or calling a local business. Ensure that the company is legitimate by checking their background with the Better Business Bureau and the Consumer Financial Protection Bureau, and by reading online reviews of previous clients.
The CFPB also recommends that you check to see if any complaints have been filed against the credit repair company before you sign up with them. If you decide not to use their services, you can cancel your contract within three business days without charge.
Credit Repair Scams
A number of credit repair companies are out to take your money and never give you a credit score boost. The Consumer Financial Protection Bureau has received more than 1,000 complaints about these types of companies in 2020.
These complaints often allege that credit repair companies make false promises or ask for upfront fees. The CFPB prohibits credit repair companies from asking for upfront payments before attempting to repair your credit report.
In addition, the CFPB warns that a credit repair company cannot legally remove inaccurate information, such as a bankruptcies. That’s because the law only allows a credit reporting agency to remove information if it is not accurate.
Using these techniques can help you save money on future borrowing, but you must make sure to follow up on any successful disputes to avoid being scammed again.