credit restoration service help consumers with poor credit scores clean up their credit reports by pointing out errors and asking that those items be removed. They also work with creditors to try and get accurate negative information (like a bankruptcy, foreclosure or repossession) removed from credit reports as well. The companies charge a fee to perform this service. While they can be helpful, it is important to understand what credit repair firms can and cannot do for you before hiring one.
What is Credit Repair?
Under the Fair Credit Reporting Act, you have the right to dispute any inaccurate information on your credit report. When you dispute an item, the credit bureau must investigate and remove it from your report if it is found to be erroneous. Credit repair services usually start by obtaining current copies of your credit report from the three major credit reporting agencies (Experian, Equifax and TransUnion). Then they look for inaccurate entries, like incorrect addresses, unpaid bills and debts not reported to the credit bureaus. They might also find outdate information, like a credit account that should have been deleted because it passed the statute of limitations, or re-aging, which occurs when a creditor or debt collector changes the “purge-from” date of an account, causing it to remain on your report longer than necessary.
A good credit restoration company will also help you with a more general plan for improving your financial situation and helping you build a stronger savings foundation. They can also help you with budgeting and money management. However, there are many ways to improve your credit and save money without paying a fee to a credit restoration company.
Can You Do Credit Repair On Your Own?
The answer is yes, but it can be a labor-intensive and time-consuming process. Many people use credit repair services because it is less difficult and faster to have a professional firm do the work for them. They will do the research and send letters to the credit bureaus and creditors on their behalf, disputing the negative items that appear in your credit report. They can also deal with more complicated issues, like removing tax liens or bankruptcies that you have paid off.
Credit repair services are not free, but they are less expensive than working with a credit counseling agency. They will charge you either a monthly fee or a per-item price for each piece of information that they successfully remove from your credit report. They can also be more expensive than a credit-management software program or an online application that guides you through the process of disputing inaccurate information on your own. These types of programs typically offer a lower upfront fee but can cost hundreds or thousands of dollars every year. They may also come with hidden fees and charges that are not always obvious. In some cases, these can be hidden in the fine print of a contract or terms of service agreement.