Your credit is important; it’s something that you’ll need to keep an eye on throughout your life in order to maintain a good financial standing. Good credit can create better opportunities when it comes to mortgages, car loans, credit cards, and more. If you’re suffering from a bad credit report, even one with inaccuracies that aren’t your fault, you could face higher interest rates, higher cost of living, and it can keep you from being approved for future credit. If you have a bad credit report, you’ll need to take the appropriate measures to remove mistakes from your credit report and begin improving your credit.
What is Credit Repair?
Mistakes and inaccurate information that appear on your credit report may not be your fault, but they will certainly continue to negatively impact your credit score unless properly handled. Even if you are not responsible for some or all of the questionable factors affecting your credit, proper credit repair measures must be taken to correct and preserve your credit score.
Most consumers don’t really know what credit repair is. Some believe that credit repair is as simple as creating disputes for credit bureaus, but the truth is that these disputes are generally ineffective. To properly repair your credit, you’ll need to take the appropriate actions with your creditors. Credit reports can be deteriorated by a number of things, from bankruptcies to charge offs. A professional credit repair service can help you learn the causes of a bad credit report and challenge virtually any credit problem on your behalf. A problematic credit report can cause untold damage to your future and finances, and it’s something that you should take seriously when starting the process of repairing your credit.
What Types of Credit Repair Services Are Available?
Monthly credit repair programs require an initial nominal fee, consultations, and credit audit. Thirty days after your one time fee for initial work, you will begin paying a monthly fee for continued services. You may cancel a monthly credit repair program as you see fit, making a final payment after cancellation as you would with a utility bill. There are different levels of monthly services available depending on the depth of damage to your credit, so be sure to choose one that meets all of your needs.
Pay After Deletion Plans
Just like monthly credit repair plans, pay after deletion credit repair requires an consult and audit. However, instead of paying month to month for items to be removed from your credit report, you won’t pay a dime until you begin seeing items removed from your credit report. Most plans of this type allow you to pay per deletion, per item, or even per bureau. This is the prefered option for consumers who are worried about credit repair scams or who don’t want to pay monthly fees for possible results.
Do I Need Credit Repair?
Credit repair is the process of fixing mistakes, inaccuracies, and any other items that negatively affect your credit score. If you make late payments or default on them entirely, have collections accounts, are hounded by creditors, or have been a victim of identity theft, your current and future credit are sure to suffer the consequences. A bad credit score poses a number of threats to your future financial state in many ways, including the following:
Lower Interest Rates
When you apply for credit cards and loans, creditors look at the information on your credit report to determine your approval and interest rates. Delinquencies in payment, new collection accounts, and chargebacks lead to increased interest rates for existing and future loans and credit cards. Higher interest rates mean that more of your money goes into paying off your debts, further increasing your cost of living. Taking action to repair your credit can help to keep your interest rates low and allow you to put more money into the things you love.
Lower Insurance Premiums
Whether it’s home, auto, or health, you probably have a number of insurance policies, all of which come with premiums. An insurance premium is the amount of money that you pay each month to keep your policy active. Believe it or not, your credit report can cause havoc here as well. Not only is your credit an indicator of how well you will make your payments, but several studies show that insurance companies use your credit report to forecast your odds of filing future claims. By investing in credit repair programs and paying off debts, you can effectively lower your insurance premiums and save money each month.
Reduce or Eliminate Cosigners
When applying for loans, your bad credit can keep you from getting approved on your own. Even worse, if you’ve defaulted on previous loans and payments, your friends and family may be unwilling to cosign a loan for you. Repairing your credit can help you to receive more approvals for cosigned loans, and even approval for loans without a cosigner.
Landlord Credit Screenings
Your bad credit can even affect your living situation. You’ll want a relatively clean credit history before applying for a rental property. Landlords almost always look at credit history and delinquent reports when screening new renters because they are looking for tenants who can and will pay their rent on time. Removing delinquent and missed payments from your credit report can not only be the difference between the types of apartment complexes that accept your rental application, but in being accepted at all.
Frequently Asked Credit Repair Questions
What is Credit Repair?
Credit repair, provided under the CROA, allows credit repair services to help consumers correct inaccurate, outdated, or unverified items that appear on their credit reports.
What can be removed from my credit report?
Credit repair agencies can only remove items that are inaccurate, unverified, or outdated from your credit report. There are a multitude of items that fall into these categories. However, any professional credit repair service will not make upfront claims that anything can be removed from a credit report, do to the complexity of the credit system.
How long does credit repair take?
Though many consumers can see improvements to their credit score early on, full credit repair takes an average of six to twelve months to complete.
What fees will I have to pay to fix my credit?
Credit repair services range in price depending on the agency and the level of repair necessary. Additional costs for the credit restoration process can include a credit monitoring account, additional dispute letters beyond the initial round, non compliance fees, and cancellation fees.
How much will my score improve?
The credit scoring model is complex and each case is different, so there is no real way to say how much or how soon your score will improve. There are also hundreds of things that may happen during the process, such as maxing out credit cards or having a judgement placed against you, that could affect the final results of your credit repair case. Keep in mind that a credit repair service is hired to remove existing items from your credit report and the change in your score is just a bi-product.
Can I speed up my credit repair?
There is no way to expedite your credit repair once it has begun, but hiring a credit restoration service is an important first step to fixing your credit and the sooner you take it, the better.
What if the negative aspects of my credit report aren’t inaccurate?
Because of how important your credit report is to your life, you need to make sure that the information presented is as substantiated, timely, accurate and fair to you as possible. While credit repair services can only remove items that are inaccurate, outdated, or unverified, it is important to remember that many items fall into these categories and credit repair may still be helpful to improving your overall score.
Can credit repair help if I am filing for bankruptcy?
You might feel like a bankruptcy filing negates the need for credit repair. In fact, having your credit repaired while filing for bankruptcy can positively impact your situation in several key ways. Revised items can slip through the cracks or be reported incorrectly, which can hurt your credit score even more. A credit repair service will catch these instances and ensure that they are recorded properly.
**What are the credit bureaus?
A credit bureau or consumer reporting agency collects relevant consumer information from creditors and courthouses. These bureaus then sell this information to interested parties. This is what happens when an inquiry is made on your credit. The US has three major credit bureaus: Equifax, Experian, and TransUnion.
How long does a negative item need to stay on my credit report?
Many people think that there is a prerequisite number of years that an item must remain on your credit report. This simply isn’t true. It’s up to creditors what information is provided to credit bureaus, and they can choose to remove negative items just as easily.
Can I apply for credit while my credit is being repaired?
When you apply for credit, an inquiry is placed on your consumer credit report. While it is not necessarily a bad thing to apply for credit while your credit is being repaired, too many inquiries can lead to a credit denial.
What is CROA?
The Credit Repair Organizations Act ensures that anyone looking to procure services from a credit repair agency is provided with the right information to make an informed decision regarding whom they choose to hire. Additionally, this act protects consumers from deceptive advertising from such practices.
Common Terms & Definitions
The process of making reparations negative aspects of a credit report in order to improve the overall score.
Credit Repair Services
Acts done in order to remove outdated, inaccurate, or unverified items from a credit report. Such services include filing disputes, negotiating with lenders, and fixing errors on your report.
Credit Repair Companies
Companies offering credit repair services in order to help consumers rectify their credit report and improve their credit score.
Removing outdated or inaccurate information from a credit file in order to improve credit standing
When an individual’s credit history shows that the borrower is a high credit risk.
Credit extended to consumers so that they may purchase goods and services without having the express funds.
Services or loans designed to help consumers improve their credit
To argue or debate, such as a charge to a credit card
a failure to make a payment on a debt
an online automated system that allows Data Furnishers and Credit Reporting Agencies to resolve consumer disputes on credit history. It is compliant with Metro2.
A data specification, created by the Consumer Data Industry Association. Used to electronically report a consumer’s credit history to major credit bureaus.
A collection of data that shows the buying and repaying history of a consumer.
A consumer credit reporting agency; one of three major US credit bureaus
used to report on the credit history of individual consumers; one of three major US credit bureaus
one of the three biggest US credit bureaus, which reports a consumer’s credit history for lenders
National Credit Repair Laws, Rules, and Regulations
If you find yourself in need of a credit fix, it is important to first familiarize yourself with some of the laws and regulations that safeguard consumers who are looking for a way to repair their bad credit. The first and foremost of these is the Credit Repair Organizations Act. Part of the Consumer Credit Protection Act, the CROA was enacted to prevent credit repair companies from misleading consumers and causing them additional financial hardship. The act also ensures that anyone looking to purchase credit repair services is given all of the information needed to make an informed buying decision. The Credit Repair Organizations Act also dictates how credit repair companies are paid, stating that they can only receive compensation once services have been rendered.
The Fair Credit Reporting Act is another federal law regarding consumer credit. This regulation has more to do with credit reporting agencies, requiring them to ensure the accuracy and fairness they gather for individual consumers. The Fair and Accurate Credit Transactions Act amended the Fair Credit Reporting Act, reducing the risk of identity theft through regulations made to the way that consumer account information is transmitted.
Additionally, there are national laws that regulate the operations of debt collection and billing error disputes. The Federal Trade Commission or FTC enforces the Fair Debt Collection Practices Act. Through this act, debt collectors are prohibited from using practices that are abusive, unfair, or otherwise deceptive in order to collect from debtors. Similarly, the Fair Credit Billing Act protects consumers from unfair billing practices. This also allows the consumer to billing errors for accounts such as credit card accounts.
But you’re probably wondering, “How can this help to fix my credit?” The best credit repair companies are able to easily follow national regulations regarding consumer credit solutions. While there are no fast credit repair solutions to fix your credit overnight, seeking the services of a credit repair company is a great way to speed up the process compared to doing it yourself. Some of the best credit repair that you can get is simple prevention. By monitoring your credit score regularly and following up with any inconsistencies in your credit report, you can stay on top of your financial health. If you find that you need more credit help, such as filing disputes with creditors, seek the guidance of a professional credit resolution company.