If you have bad credit, you know that it can haunt you in nearly every aspect of your finances. If you’re in the market for a mortgage or a new car, you will most likely find getting an approval difficult. Any eventual approval is sure to have high-interest rates as well. It can even affect your ability to find a job. A lot of consumers turn to credit repair services to assist them in bettering their credit. Do these companies work? Yes, as long as they’re reputable.
So, what do these companies do to restore your credit? The honest answer is nothing that you can’t do yourself. A multitude of articles, such as this one, provide sound advice. However, some people like having a service that does the work for them, especially if they don’t have a basic understanding of how credit works or what their rights are as a consumer.
Most importantly, a reputable credit repair company will always be upfront about what services they offer and open about where they are in the process of working on your behalf.
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In general, most credit repair companies will provide you with a copy of your credit report, hopefully, one from each of the three major bureaus: Experian, Equifax, and TransUnion. The company will assess your report and identify potential inaccuracies, such as erroneous inquiries or unverifiable information. They will file a dispute on your behalf for any inaccurate entries found. It is important to note that the bureaus can only remove incorrect adverse reporting. These companies cannot petition to remove negative reporting containing accurate information.
Some companies will also provide some financial advice as part of their fees. These advisors will work closely with you to create a plan to help pay off your outstanding balances more consistently and create ways to generate good credit while “repairing” the bad credit. Consult with your advisor if you are unsure of what contributes to your credit and how your financial habits can influence your score. Continuous credit monitoring is often a part of the service, allowing easy access to your report if something changes. For an extra premium, you can sometimes buy an identity protection plan to keep your identity (and your credit!) safe from theft. This can protect your credit from further damage or protect your score from getting damaged once it is improved.
It is imperative to mention that there is no quick fix for bad credit. It is a lot easier to damage credit than it is to improve it. Delinquencies and hard inquiries fade over time, but it takes 7-10 years for them to have a minimal impact on the score. Keeping recent accounts in good standing is the best way to show good financial responsibility.
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