Credit Repair: Effective Steps to Fix Your Credit

Your financing options and access to capital will heavily depend on your credit score. Most lenders will get information from credit bureaus to check your credit background. Chances are if you have a low credit score and a history of late payments or even default, you have limited loan options. This may be bad news. But on the other hand, the good news is that there are ways to fix your credit.

Credit Repair

Why do people take payday loans?

There are many people who turn to credit repair companies, only to end up being scammed. So this causes a lot of confusion and negative information. Can a credit repair company really help you improve a bad credit score and those items on your credit report?

The answer is yes, they can help. But you can also do it yourself.

How Can A Credit Repair Company Help?

Before delving into specific details, it is very important that you know how credit repair companies work and how they can help. They can do the following to help you repair your credit:

  • A credit repair company can get credit reports from the three different credit bureaus which include TransUnion, Experian, and Equifax.
  • If there are certain items on your credit report that they think are disputable, they can file for a dispute. If it is successful, you can increase your credit rating.
  • They can remove negative items from the report but they can only do so using legal means. For instance, they can negotiate with creditors.

Know More About the Credit Repair Organizations Act

To avoid being scammed, it is important to be aware of what a credit repair company can do and cannot do. On April 1, 1997, the Credit Repair Organizations Act was enacted. This is a federal law that regulates credit repair service companies. They are prohibited from taking payment from clients until they have finally completed the services that they offer. They also need to have a written contract which states all the information, along with the terms and conditions. Under the said law, clients can withdraw from the contract 3 days after signing it.

Consumers are protected from scammers as these credit repair companies are forbidden to offer false claims regarding their services. The company cannot also give you a waiver to sign stating that you are waiving your rights under this federal law.

How Much Does It Cost?

If you seek professional help from a legitimate company, the cost should be reasonable. It ranges from $50 to $100 a month. There are different companies to choose from and some may even give you a free consultation. With the free consultation, you get to see your credit report and then choose among the different packages they offer.

What can you expect from the packages? It varies. For instance, if you opt for a more expensive package, the company can provide assistance and services like Cease and Desist letters for collectors who are harassing you, ID theft protection, etc.

Tips to Avoid Credit Repair Scams

Over the years, there have been many consumers filing complaints to say that they are victims of scams. To avoid this, here are some things that you need to do and to keep in mind:

  • Credit repair companies that promise you that they can remove all the negative items from your credit report is definitely a scam. There are things that they can do and cannot do.
  • You need to know what previous customers say about them. If they say that this company is a scam, then trust the feedback.
  • Another thing that you have to keep in mind is that credit repair is different from debt consolidation. With credit repair, you ask for professional help from a company to use legal methods to clean up your credit report.
  • Take the time to check the profile of the company. Look at their website and make sure that prior to signing any agreement, you completely understand the terms and conditions of the contract.

Fixing Credit On Your Own

Credit repair companies can help you. But you can actually do it on your own without having to spend money. Here are some tips that you can do to fix credit on your own.

  • First is make sure that you check your credit report. It is very important that you have the information for you to check. It is actually free to get these reports from credit bureaus. When you know your credit score, you are at least aware of your credit standing.
  • If you see that there’s something wrong with the items in your credit report, you can actually dispute these remarks. There are cases where they make errors and it is your right to dispute these errors.
  • You can dispute for late payment entries. If there are incorrect entries, it is important that you dispute for these entries.
  • One great way to increase your credit score is to pay your outstanding debt. In order for you to have more financing options, you need to get a higher credit score and by defaulting on your previous loans or not paying your outstanding balances, you are only making things worse.
  • Be wise in your financial choices and decisions. These do not only affect your credit score as well as your life.

Fixing your credit score and improving your credit profile does not have to be that expensive. It is really not necessary for you to get a credit repair company. But if you are not sure how things work especially since there may be legal matters that you have to attend, the best way is to get a credit repair company to help you.