Maintaining a good credit rating is a vital part of managing financial health and ensuring you have access to the best opportunities for loans or credit cards when the need arises. If you have damaged your credit score through late payments or refusing to make payments at all, a credit repair company’s advertising can lure you into believing they can miraculously improve your credit. Often, these claims turn out to be empty promises.
What is credit repair
Credit repair is when you pay a company to remove or change information on your credit report, thereby resulting in a higher credit score as negative items disappear one by one. If there is a mistake on your report, you can easily contact the three credit bureaus to get that information removed. However, the promise some credit repair companies make to remove accurate but negative information is what has gotten many in trouble. If you find yourself needing credit repair, what should you watch out for when reviewing companies?
Immediate credit score improvement
Credit repair scams often entice unsuspecting individuals by promising to instantly improve your credit score. They will assert that they know the ins and outs of the industry and can easily erase any negative information in your report. Unfortunately, there’s no magic wand that can make your credit score skyrocket overnight. Legitimate credit repair takes time and effort, so be wary of any company that claims otherwise.
Requests for upfront payment
One of the biggest warning signs is a demand for upfront payment before any services are rendered. Legitimate credit repair companies typically charge for their services after they have completed the work. In fact, according to a recent New York Times article, it’s illegal for credit repair companies to “ask for or receive fees until six months after they have achieved results for the customer.” So, if you’re asked to open your wallet before anything has been done, it’s time to hit that red flag button.
Lack of information
In the world of credit repair, transparency is key. Legitimate companies will provide you with clear information about their services, fees, and your rights as a consumer. If you find yourself dealing with a company that is evasive or refuses to provide you with the information you need, it’s a clear sign to proceed with caution.
Disputing legitimate negative information
While legitimate credit repair companies can help you address errors on your credit reports, scammers may go a step further and dispute legitimate negative information. This unethical tactic can lead to serious consequences, including legal trouble.
High-pressure sales tactics
If you are talking to a credit repair company and they begin to use high-pressure sales techniques that make you feel like you urgently need their services, it’s time to take a step back and reevaluate. Don’t let them use a sense of urgency, instill fear, or even emotionally manipulate you into hiring them. Take your time, do your research, and make an informed decision.
Claiming affiliations with the government
Some credit repair companies may claim to have legal expertise or even that they are affiliated with government agencies. They may use fancy legal jargon to confuse and persuade you. Remember, legitimate credit repair companies do not need to resort to such tactics. If something feels off or too complicated, it’s better to walk away and seek help elsewhere.
Consider DIY credit repair
Credit reporting agencies aren’t easy to deal with. However, there are steps you can take to ensure that your reports are accurate and reflect truly on your credit history. Start by contacting all three bureaus to obtain your reports. Read through each, line by line, noting any errors or discrepancies that need correcting. Each agency has a system for reporting inaccurate information.
Improve your financial health
If you’ve paid bills late or made other mistakes with your credit cards or loans, it will take time for these notations on your report to age out. Most credit agencies keep negative information – such as late or missed payments, or bankruptcy – on your account for seven to ten years. That means that your credit score will be impacted by this information for years. However, the impact can diminish over time if you practice good financial habits, like paying your bills in full and on time while not maxing out your credit cards.
I can’t do this on my own
If you don’t have the bandwidth for dealing with three credit bureaus and their assorted forms, or don’t know where to start improving your financial habits, you may want to contact a credit counseling agency. You can find one by visiting the National Foundation for Credit Counseling and searching online. When you’ve discovered a couple of options that seem trustworthy:
Research for positive customer reviews. Check online reviews and testimonials from previous clients to get a sense of each company’s credibility. Beware of companies with an excessive number of negative reviews or a lack of customer feedback.
Make sure they offer a clear pricing structure. Avoid companies that make extravagant promises without clearly stating the costs involved. Look for companies that offer a detailed breakdown of their fees and provide a written contract that outlines the services to be provided.
It’s crucial to stay vigilant and informed when it comes to credit repair. While you may feel like throwing up your hands at your current situation, spending money you don’t have for a company that doesn’t improve your situation won’t help. Make sure you take the time to understand the warning signs of scammers. Consider if you can go it alone in an attempt to clean up your credit report. And if you decide to contact a counselor, choose one that’s received positive customer reviews and promotes transparency.
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