If you’re struggling with bad credit and can’t seem to turn your situation around, it may be time to seek out professional help.
Credit repair companies promise to help you have incorrect information removed from your credit reports — for a fee, of course. Credit repair companies also provide important counseling and advice that can help you repair your credit for good.
Unfortunately, credit repair agencies don’t have the best reputations, and they can’t do anything for you that you can’t do yourself. Should you reach out to a credit repair company for help? Keep reading before you decide.
How Does Credit Repair Work?
Credit repair companies are third party businesses that help consumers figure out which issues are dragging down their credit scores.
While the main goal of credit repair companies is having negative information removed from credit reports, many offer additional services such as:
- Credit score counseling
- Cease and desist letters
- Credit score analysis
- Creditor interventions
For the most part, credit repair is for consumers who are entirely overwhelmed with their credit problems and know they need help. While consumers can and often do repair their credit scores using the same strategies as credit repair agencies, there are many people who need help from a third party to get started.
While many credit repair agencies offer a free consultation to see if you’re a good candidate for their services, their main services come with a hefty monthly fee. Prices vary, but most credit repair agencies offer monthly fees that range from $80 to $150 while they work on your case. It may take a few months of payments to get your credit back on track, but it may also take only one.
Unfortunately, consumers may not know how long they’ll need to pay for credit repair services until they’re already in the thick of it and working with an agency. For that reason, it can be difficult to know up front how much credit repair will cost.
Finally, credit repair simply helps you correct errors on your credit report. This can help you improve your credit score. But it will not erase or eliminate debt you currently have.
Note: If you are struggling with your debt, then it would be a good idea to look into debt consolidation, debt management solutions, or debt settlement options. Companies offering these services may be able to help you improve your debt situation. Keep in mind these services often come at a cost, and you can do much of the debt consolidation process yourself.
Does Your Credit Score Really Matter?
If you have bad credit but can’t seem to motivate yourself to take steps to repair it, you may want to rethink your position. Your credit score may matter a lot more than you think, but you may not find out how much you need good credit until you really need it.
While having good or great credit can help you qualify for a mortgage or other loans with the lowest interest rates and best terms, poor credit can leave you unable to qualify for a loan of any kind. And, even if you are approved, you may wind up paying considerably more interest and much higher fees.
In addition to finding yourself unable to qualify for a mortgage, bad credit can also make it difficult to qualify for an apartment without a cosigner. You could also find yourself unable to get a car loan — even if you desperately need transportation to get to work.
Finally, insurance companies can charge higher rates to consumers with poor credit. The sum of these additional costs can add up to many thousands of dollars over the year and that’s in addition to the hassles you’ll face.
The bottom line: If your credit is bad, you should take steps to repair it — either on your own or with help.
Related Post: Fair Debt Collection Practices Act
The Problem with Credit Repair
If you can’t decide whether to pay for credit repair or craft a DIY credit repair strategy, it’s important to note that credit repair agencies can’t fix your problems overnight. They also can’t perform any services you can’t do for yourself, although they can take on the brunt of the work for you.
Credit repair agencies have gotten a bad rap, however. The National Consumer Reporting Association even says that, “despite the phenomenal claims made by most credit repair companies, all they do is dispute tradelines in the name of the consumer.”
They also maintain that credit repair companies cannot do anything the consumer cannot do themselves for free and faster. And in fact, “they cannot even obtain a copy of the consumers’ credit report as credit repair companies are prohibited access to Experian, TransUnion and Equifax.”
The worst part is, credit repair companies charge money for their services, which are often mediocre at best. Then again, not everyone has the time or energy to devote to repairing their own credit. If you’re someone who desperately needs outside help, they may be one of your only options to turn your situation around.
How to Repair Your Credit Yourself
If you’re considering repairing your credit on your own, it’s important to know there are many steps you can take yourself that might help. The Federal Trade Commission (FTC) even lists some advice on their website that can help you get started.
Here are some steps you can take to repair your credit right away:
- Get a free copy of each of your credit reports: The first step you should take to repair your credit is getting a free copy of each of your credit reports from the three credit reporting agencies — Experian, Equifax, and TransUnion. Fortunately, you can get a copy of each of these reports for free once per year at AnnualCreditReport.com.
- Dispute any incorrect information you find on each of your reports: If you find incorrect information on your reports, take steps to tell each of their credit reporting companies, in writing, what exactly you think is inaccurate. The FTC offers a sample letter you can use to dispute information, but make sure you also include any documentation or proof when you contact them.
- Regularly monitor your credit. Monitor your credit reports to ensure no new incorrect information is reported, which can drag down your score.
- Pay down debt: A final step you can take to help your credit is paying off any debts in collections you have. By paying off old debts, you can settle these accounts and expedite a situation where they are no longer reporting negative information to your credit reports.
Credit Repair Companies to Consider
If the steps above sound daunting or you just don’t have the time, you may want to pay a credit repair firm for their help. But, which firm should you go with? Consider these three popular credit repair companies that offer services nationwide:
Lexington Law offers credit repair services and counseling that can help you get your credit back on track. Their services start at $89 per month, and their main goal is removing unfair, inaccurate, or unverified information from your credit reports. Lexington Law offers free consultations that can help you get started.
CreditRepair.com also focuses its efforts on removing incorrect information from your credit reports because, as they say, “removing negative items is one of the fastest ways to increase your credit score.” This company offers a free 15-minute analysis of your credit situation and a proven online system that costs just $99.95 per month.
Ovation Credit Services
Ovation Credit Repair, which is offered by parent company LendingTree, promises to work with the credit bureaus and your creditors to resolve your credit issues. They offer a free consultation to determine if you’re a good fit for their services, and their plans start at just $69 per month.