A good credit repair company can remove negative or erroneous items on your credit report for the purpose of improving your credit score. This will make it easier for you to get a loan for a vehicle, mortgage or insurance. To tell you the truth you have the option to go about this on your own at no cost to you. Doing so of course will involve having to file a formal dispute with the credit bureau either via snail mail or online. The formal dispute will require a detailed explanation of the error that you want to correct along with other supporting documentation. Most folks do not have the time or the know how to make their case. Therefore, hiring a reputable credit repair company to dispute errors on your behalf is the feasible option. This is particularly helpful especially if you have multiple errors on the report or worse if you were a victim of identity theft.
How Does Credit Repair Work?
When it comes to repairing credit, the credit repair companies rely on three standards to ensure you have the best chance of obtaining the right score. Credit reports should be accurate 100%, fair and substantiated fully. A good credit repair company will repair your past by working with the credit bureaus and your lenders to challenge any negative report items that have an adverse effect on your rating. The result is an updated credit history that is accurate and reflects your current state of finances. They can also monitor your current situation so that you are aware of any changes or updates on your report. Depending on the company, they can offer you customized information and tips regarding how the reported items can affect your rating.
Credit Repair Companies Take Charge
When you sign up with a credit repair company you are essentially letting professionals take charge of communicating and negotiating with your creditors and credit bureaus. This takes a lot of load off yours. Working on credit repair on your own is a very long and tedious process. You have to be knowledgeable about the different laws and communications needed for every questionable item on the report. Moreover, there may be situations requiring challenging items with original creditors, collection agencies and even all three credit bureaus. When you opt to get a credit repair company, you are putting the responsibility of reviewing your reports, gathering data and documentation, drafting letters, following up on items etc. essentially to them.
Know The Laws
Credit repair companies have a very good knowledge and understanding governing laws so they can leverage them to your favor. A reputable organization will be familiar with the following:
- Fair Credit Reporting Act (FCRA)
- Fair Debt Collections Practices Act (FDPCA)
- The Fair Credit Billing Act (FCBA)
- Other consumer protection statutes
Access to a Credit Counselor
A credit repair organization will help you get out of your current financial rut with access to a certified credit counselor. This professional will assess your current financial situation and provide recommendations on how you can pay your debt in a timely and regular manner.
Free Access to Educational Materials
You should be provided with educational materials that provide you information on a number of different topics involving helping your regain control of finances. Brochures and videos on budgeting, paying debt on time, avoiding debt and more can help you in your quest to achieve a better credit score.
Debt Management Plan
A DMP or debt management plan is a plan that allows you to pay your debt in staggered regular amounts over a period of time. Only after sound advice from a credit counselor should you sign up for a DMP. Once this is warranted, the counselor will be the one to negotiate with your creditors on possible reduction of interest rates and monthly payments and even have fees waived or reduced. Once n agreement with the creditors have been reached, you will then be required to make monthly deposits with the credit counseling organization who will then use the money to pay the unsecured debts.
You will have to be diligent regarding paying the agreed-upon amount each month in order for this to work. The credit counselor might also suggest that you close your credit cards so as to avoid incurring any new debt as you work through the debt management plan.
Keep in mind, settling your accounts for less than the full amount that you owe on the credit card can have a negative effect on your credit score. However, some folks have put priority more on debt payment first and then taking care of the score later once the dust settles.