There are a lot of “credit repair” companies out there, and they promise a lot. How good are their promises, and what can they really do for you. We will take a look at the realities of the credit repair business in this article.
Credit Repair involves a company contacting the three major credit bureaus for you, on your behalf, and disputing derogatory items on your credit report.
Understand this, first of all: the purpose of the three major credit bureaus, Equifax, Transunion and Experian, is to accurately report a client’s credit and payment history to potential lenders.
They generally do a very good job of fulfilling this mission. If items are true, you really have no right to expect those items to be removed before seven years have passed, or, in the case of bankruptcy, ten years have gone by.
That being said, the credit repair companies basically exploit a part of the law, under the federal Fair Credit Reporting Act, which states that a consumer has the right to dispute any item they feel or believe to be inaccurate on their credit report. A disputed item can be presented to the merchant who granted the credit, and that merchant has 30 days to validate that that debt is correct. If the merchant fails, for any reason, to verify that debt as accurate within a 30 day period from the time the dispute is filed, then, by law, that derogatory item must be removed from your credit report!
In the real world, especially during the Christmas holiday season, merchants often do not have a chance to respond within the required 30 days and verify legitimate debts, so the credit repair company will then be able to have that derogatory item removed. Other merchants may have gone out of business, etc., so it is not necessary to wait a full 7 years to have that item drop off your credit report.
You as a credit consumer can dispute any item on your own credit report. Are you able to do that? Are you a good letter writer? Do you know how to navigate the complexities of obtaining and updating your reports? Some people can, some people cannot. The credit repair companies will do all this work for you. And they are good at it, they do it every day, all day long.
There are a lot of credit repair companies, however, that promise too much, and charge too much up front. Some companies want you to pay hundreds of dollars up front before they go to work for you.
A good credit repair company will charge you by the month. The first month may involve a small set-up fee in addition to the monthly fee. You are not committed to a contract, you use their services for as many months as they need to get your credit scores improved sufficiently. For example, $75 to set up and $49 a month, no contract.
Under the law, a credit repair company cannot usually obtain your credit reports for you, they will advise you as to how to obtain them, whether for a fee or free. You need to provide them with your credit reports that they can work from to begin the repair process.
Everyone has a right, under federal law, to a free annual credit report. Google this and you will find the site for this.
I am a mortgage broker and I deal every day with clients whose credit is not up to snuff, and I do have a credit repair company I refer clients to, and, 3 or 6 months down the road, they are in better shape and I can then help them get the loan they seek.
As always, seek the advice of a certified financial planner or mortgage planner when you begin the credit repair process, so you can steer clear of the scammers and get aligned with a good credit repair company.
By: James Hussher
Posts Tagged ‘Credit Equifax’
Does "Credit Repair" Really Work?
January 27th, 2010Credit Repair Made Easy
October 22nd, 2009
Did you know that credit repair could be accomplished without outside help? Your local library may contain the books you would need to help you rebuild or repair your credit score.
To get started, you need to learn what your credit report says about you. You can gain this information by writing to each of the credit bureaus and asking for a copy of your own credit report. You can do this online by visiting http://www.annualcreditreport.com or by writing to one of the three major credit bureaus.
Credit Report Bureaus to Contact
The following are credit bureaus. They hold on to reports of your credit history. Write to each for information on how to get your credit report.
Equifax Credit Information Services, Inc.
P.O. Box 740241
Atlanta, GA. 30374
Call Equifax at 1-(800) 685-1111 to order a credit report by phone. To place a fraud alert on your credit report with Equifax, call 1(888) 766-0008
Website address is http://www.Equifax.com
Trans Union LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
Website address is http://www.Transunion.com
Call Transunion at 1 (800) 888-4213 to only order free credit reports
Experian
National Consumer Assistance Center
P.O. Box 949
Allen, TX 75013
Call 1 (888) EXPERIAN to order credit reports or place a fraud alert on your credit report.
Website address is http://www.Experian.com
How To Review Your Credit Report
Be sure to read up on the directions for correcting your report. For example, if you find information that does not fit your true history, you simply need to write and contact the credit bureaus. Each of them has prepared instructions for reporting errors. If you find information that is not entirely correct, you can report this as directed and explain how it is incorrect.
If there is something that you are not familiar with, ask the credit bureau to give you the name, address and number of the institution that may be giving a false report. You may be able to sort it out and fix your credit further.
After all this information has been corrected, submit it to the designated credit bureaus. Be sure to keep a copy of this information for yourself as well for your own records. If anything should get lost in the mail, you’ll be able to make a quick copy and submit it.
You Don’t Have To Repair Your Credit Alone
That’s how easy it is to actually repair your credit report, though even this process may be overwhelming. If you find that you are nervous about going through the process of credit repair alone, you may ask for assistance. Credit repair companies are available and for a small fee they can assist you with your credit repair.
If you choose to try a credit repair company, do be sure to check out the company before forwarding any money. Check to see if your credit repair company is registered and bonded as a credit service organization. You can check with the secretary of state’s office to be sure. Always check that a credit service is registered before getting involved with or paying any company.
No one should have to suffer with a poor credit score, when it is simple to get back on track with a few easy repairs. You don’t even have to go at it alone. There is always help available when you need it.
By: Lee Harrison
Credit Repair & Scoring – A Better Understanding
October 7th, 2009
Credit remediation is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process. Sub-prime borrowers who are eager to move into A-Paper territory often find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.
The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to annualcreditreport.com)
It’s also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don’t despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.
While credit repair is necessary for some, it’s not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:
· Evenly distribute your credit card debt to change the ratio of debt to available credit. Let’s say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.
· Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don’t close those old accounts!
· Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you’re only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.
Remember, credit scores don’t change overnight. Improving them requires time and diligent effort on your part, so it’s a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.
If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission’s website, which contains a wealth of helpful literature.
If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC’s regulations on credit repair. With over 1200 credit repair companies to choose from, it’s important to be certain you are dealing with a reputable firm. Examine the FTC’s information on fraudulent practices to avoid falling prey to credit repair scams.
Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.
By: Hal Tennant
