When researching ways to fix your credit, you’re sure to come across credit repair services that offer to help. This can trigger several questions. Should you take their help or should you try and fix your credit on your own? What are credit repair services anyway? Are they legit? What can they do that you can’t?
Here’s everything you need to know about credit repair services.
Credit repair services are offered by third-party, independent companies that help consumers repair their credit for a fee. Their clients include individuals with poor credit scores as well as individuals with negative records on their reports.
Yes, credit repair services are legitimate. These services are regulated by the Credit Repair Organizations Act. The Act requires credit repair companies to comply with certain regulations in order to operate within the law. For example, companies cannot make untrue or misleading representations or guarantees nor can they demand advance payment. All credit repair contracts must be made in writing and consumers must be given specific cancellation rights.
Unfortunately, as with any other industry, there are several credit repair companies that are not legitimate. Dealing with these organizations will only make matter worse for you. You’ll just end up paying huge fees and waste a whole lot of time. If you decide to hire a credit repair company, it’s important to know how to identify they are legit or not.
Legitimate credit repair services will always operate in compliance with the regulations set by the Credit Repair Organizations Act (CROA). These signs indicate a credit repair service is legit:
This is a legal requirement. According to the CROA, credit repair companies are required to advise consumers about their right to repair their own credit. Companies that don’t provide this statement run the risk of being shut down.
Yes, negative information can pull your score down. Removing it is the fastest way to boost your score. However, if the negative information is accurate, disputing it is illegal. Credit bureaus investigate all disputes thoroughly. You can’t get away with it and the bureau could charge you and the credit repair company for false representation. Stay clear of any organization that promises to erase negative information from your report.
Asking for advance payment is against the CROA guidelines. Legit credit repair companies will only charge you after they’ve completed the promised services. In fact, they’re required to have this clearly stated on their website as well in the agreement.
This is also a CROA requirement. Before they start any repair services, a legit company will provide you with a written contract. This contract should include a description of the services they will provide and detailed terms and conditions. It should also include your right to cancel without penalty under certain conditions. Don’t deal with any credit repair service organization that doesn’t provide you with a written contract.
In your search for legitimate credit repair services, stay if you notice any of these red flags:
This includes accurate as well as inaccurate data. The truth is you cannot remove accurate information from your credit report. Anyone who guarantees they can do this is sure to try something illegal, which could get both parties in trouble.
Asking you to pay in advance is against the CROA regulations and is illegal. A credit repair company can only ask for payment after providing you the agreed-upon services. Advance payment requests are a definite red flag.
When you contact any credit bureau, they’ll give you legit advice and set you on the right track. This doesn’t bode well for the fraudulent credit repair company so they’ll do their best to discourage you. The truth is you can and should contact the credit bureau directly for the best advice.
Credit repair companies must include this disclosure on their website and also in the contract with consumers. Failure to comply with this requirement is illegal.
A written contract with the terms and conditions clearly laid out is a legal requirement. If the company makes excuses about providing you with one, it’s best to stop dealing with them altogether.
The company advises you to dispute all negative information on your report, even if it’s accurate. This is just a tactic to overwhelm the credit bureaus and hope that something works. Again, this never works and it’s not something you should encourage. Consider it a red flag if a company advises you to do this.
Hiring a reputable legit credit repair company can definitely help get your credit back on track. However, these services are expensive. Moreover, they aren’t doing anything that you can’t do yourself. There’s a standard procedure in place for disputing and correcting errors on a credit report. This is regardless of whether you do it yourself or you hire a credit repair service to do it for you.
The first step is to review your credit report to identify what’s dragging your credit score down. If there are any inaccuracies, you can raise a dispute with the credit bureau. Credit agencies cannot ignore your dispute. They must address the issue within 30 days. If the inaccuracy is verified, the bureau will remove it from your report and restore your credit score. Only consider hiring a credit repair service if you find the process overwhelming or confusing.
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