Does credit repair really work?

Legitimate credit repair companies can ensure that inaccurate information is removed from your credit reports so that it doesn't damage your credit rating. Understanding Credit Repair · How Credit Repair Works Legitimate credit repair companies can ensure that inaccurate information is removed from your credit reports so that it doesn't hurt your credit score. However, they can't do anything for you that you can't do for you if you're willing to put in time and effort. Having a good credit score is important.

Without it, you may be denied low-interest loans and lines of credit, a job, a rent, and even an insurance policy. If your credit report shows a history of debt problems or contains errors, you may consider using a repair service to “clean up” it. However, before you pay, know how these companies work. In the vast majority of cases, hiring an external company will only waste your money.

Unfortunately, none of those promises are true. Credit Repair Companies Offer to “Fix Your Credit by Eliminating Negative Elements from Your Credit Report”. They offer to file disputes about negative items on your behalf with credit bureaus and have them removed. What is the problem with this approach? The whole strategy is based on taking advantage of a legal loophole in the credit system.

When accurate items are removed, it is only temporary a few months at most. If the information provider considers the item to be inaccurate, they must notify the three credit bureaus and request that the item be removed from all their credit reports. Remember that even if you pay to have information removed from your credit report, there is no guarantee that your credit score will increase. What might seem like a simple and positive solution to your credit situation is actually a series of false promises that are likely to damage your credit.

Historically, mail has been the preferred method for credit repair companies for several reasons. The first is that if the information that the credit repair service is disputing is correct, they will report it again the next time they send data to the agencies. While that doesn't mean that credit repair doesn't work, it does, as long as your disputed items meet the requirements, but it's certainly not a panacea. Credit bureaus rely on third parties to report their financial behavior, so not all items are reported to the three consumer credit bureaus (Equifax, Experian and TransUnion).

If a credit repair company promises you that you will see a specific number of items deleted from their reports, you may want to do more research on the company's reputation or simply choose another option. When that happens, the credit repair company takes action, calling on the consumer to announce that the item was recalled and suggesting that the consumer pay more each month to “keep up the momentum and go after the rest. Credit repair companies are not allowed to hide the above notices in the language of their contracts. Enacted in 1996, CROA clearly states what credit repair companies must do, and should not do, to continue to comply with federal law.

However, if your disputes are more complicated, it can be less stressful to hire an experienced credit repair company to act on your behalf. Credit repair companies make sure you know when these items are recalled, but they don't tell you when they reappear. Once you have the EIN, you will be prompted to apply for a new credit with it, so you can create a whole new credit history. While legit credit repair companies can do what they promise, the field is rife with scammers.

This is where the credit repair service asks you for an Employer Identification Number (EIN) from the Internal Revenue Service, which has the same number of digits as a Social Security number. .

Gwen Dasilva
Gwen Dasilva

Entrepreneur. Proud coffee advocate. Wannabe music fanatic. Certified twitter enthusiast. Coffee geek.