Credit repair companies will go over your credit reports with a fine-toothed comb to find inaccurate information that could be hurting your scores. They also file disputes with the bureaus and creditors on your behalf to get negative marks removed from your report.
To compare companies, pay close attention to the upfront and monthly fees and how many items a company will dispute per month. Also, look for a good reputation and educational resources on their websites.
Disputes with the Bureaus
As the name suggests, most credit repair companies work by disputing inaccurate or negative entries on a person’s credit report with the bureaus. This involves writing letters to the three major credit bureaus, explaining the error and providing any documentation that supports it.
Under the Fair Credit Reporting Act, credit bureaus must investigate disputes and remove incorrect information from a consumer’s credit report within 30 days of receiving them. Some credit repair companies may also help consumers write cease and desist letters to debt collectors or creditors who are violating a person’s rights by harassing them.
Credit repair companies also might offer goodwill letters, which ask creditors to give a person a break by removing an item from the credit report for a legitimate reason. For example, if a person misses a payment due to a medical emergency, they can ask the company to remove that entry from the report. This can help boost a person’s credit score.
Monitoring Your Credit
In addition to disputing errors, credit repair companies often monitor your credit reports for changes. They can alert you by email or text message when your report is updated and when your credit score changes. They can also provide you with a personalized credit improvement plan that includes recommendations for improving your credit profile.
However, if a credit repair company claims that it can remove negative accurate information from your report, it’s probably a scam. Under the Fair Credit Reporting Act, you have the right to dispute inaccurate information on your own without the help of a credit repair agency.
You can find reputable credit repair agencies by reading reviews and checking with consumer protection agencies and the Better Business Bureau. Before signing a contract, make sure the company explains in detail its services, how long it will take to get results and any guarantees it offers. It should also include a three-day window that allows you to back out of the agreement without penalty.
Increasing Your Credit Limits
Credit repair companies check your credit reports and dispute inaccurate information with the bureaus and creditors. They also offer other services like credit monitoring, personal finance advice and debt settlement.
Some credit repair companies offer a flat-rate or monthly plan while others charge per dispute. For example, The Credit People offers a six-month money-back guarantee and their customers have seen an average increase of 81% in their score after working with them.
In addition to disputing errors, some credit repair companies can help you improve your credit by requesting a credit limit increase on your existing accounts. This is a simple way to improve your credit utilization ratio, which makes up 30% of your credit score.
If you’re considering using a credit repair company, make sure to read reviews on BBB, Yelp and other online sources. You should also get a firm total on costs, an estimated timeline and the right to cancel without charge within three days of signing a contract.
Negotiating with Creditors
A credit repair company works on the client’s behalf to dispute inaccurate information and remove it from credit reports. The company may also negotiate with creditors to settle or reduce outstanding debts.
The process typically begins with an initial consultation, where the company reviews the client’s credit reports from each of the three bureaus — Experian, Equifax and TransUnion. Then, the company develops a strategy for disputing errors and negotiating with creditors.
Many credit repair companies also offer ongoing monitoring and reporting, as well as educational materials and financial counseling to help clients build healthy credit in the future. Some even offer a credit-building loan and financial tools like score trackers.
When shopping for a fast credit repair services make sure the company offers a money-back guarantee and follows the Credit Repair Organizations Act. And avoid any company that demands upfront fees, as these are a red flag. If you experience buyer’s remorse after signing up, federal law gives you three days to cancel the contract without penalty.