Getting Help with Credit Repair

What Credit Repair Companies Do

Before you sign up for a credit repair company, it’s important to understand what they do (not to mention what they don’t do). Reputable credit repair firms work on your behalf to dispute negative items on your credit report that may be inaccurate. They work directly with each of the three credit bureaus: Equifax, Experian, and TransUnion. In the ideal scenario, these negative items are removed for your report, which consequently improves your credit score. You can then have access to better financing opportunities when you need them.

What kind of items can be disputed with a professional company?

Common incorrect negative entries include the following:

• Negative items like late payments that should have aged off
• Inaccurate reporting of collections and other accounts
• Duplicate entries
• Inquiries, accounts, and collections due to fraud or identity theft

The best credit repair companies offer a free introductory consultation where they’ll review your credit report and let you know how they’d tackle your problems. They should also be upfront about how likely it is to get certain items removed. For example, a bankruptcy listing is much more difficult to dispute than a late payment.

In addition to handling the dispute process on your behalf, many companies offer additional services as well. They may help you monitor your credit so you can track your progress as they work on your case. This information lets you see the impact on your credit report and score while also giving you an idea of when to cancel your plan.

They also help with credit-related correspondence. A goodwill letter, for example, essentially asks your creditor to remove a late payment from your credit report simply because your account is now in good standing. A cease and desist letter can be used to request debt collectors stop contacting you about your account. Depending on your financial situation, you may or may not need these services from your chosen credit repair company. Picking the best one is about your own personal needs and how the firm best aligns with your goals for credit restoration.

How to Pick the Best Company

One of the most important ways to pick a credit repair company is by using available resources to verify their information. This way, you know you’re getting good value from the money you invest in these services by choosing a top firm. Start by checking out company reviews online. FundFirst Capital has a list of recommendations, and you can also see customer reviews. Be sure to read a few different reviews to get a holistic view of how customers have experienced each company.

You can also check the credit repair firm’s rating on the Better Business Bureau. While you can get a general idea of their reputation by their letter grade, read the details as well. Some companies are penalized simply for not responding to a request for information from the BBB.

BBB ratings are a great place to start, but shouldn’t be your only source for reviewing credit repair companies.

As you narrow down your list based on reputation, next take a look at the price versus level of service. You may notice a wide range in monthly cost, which typically indicates there’s a difference in what you actually get with each plan. It’s smart to find a balance between what you can comfortably afford and what service you get that’s really relevant to repairing your credit effectively.

If you’re already struggling with debt, you obviously don’t want to splurge on the most expensive plan and continue to hurt your budget each month. On the other hand, if you’re financially secure and are preparing to fund a major purchase with a loan (like a new car or home), it may be worth the investment to get extra services or an expedited process, even if there’s an additional cost.

Finally, don’t be afraid to ask questions before signing up. Whether you enroll in a free consultation or simply want to clarify details about the process or the team. Find out who’s handling your case and what kind of professional backgrounds are available. The best companies typically have lawyers on staff who are well-versed in consumer rights. Credit repair is a big deal so make sure you have the right people working for you.

Potential Red Flags

Whether you’re researching a company to work with or are currently paying a credit repair service, be aware of some potential red flags that may be a warning sign that you’re being scammed.

Not all credit repair companies are created equally. Do your due diligence to find the best one before you give away your personal information.

Here is a list of red flags to watch out for. If a credit repair company does or says any of these things, you should rethink establishing a relationship with them.

Red Flag #1: Results Guaranteed

No credit repair agency should ever guarantee results. This means they shouldn’t say that they can definitely improve your score and they absolutely shouldn’t guarantee you a specific point increase. Avoid working with this type of company because there’s no way to 100% predict how the credit bureaus will respond to a dispute.

Red Flag #2: Accurate Negative Items Can Be Removed

Credit repair is certainly legal and is your right as a consumer. However, in order to permanently remove a negative item, it must be proven to be inaccurate, unfair, or misleading in some way. Anyone who claims that they can get rid of anything listed on your report is not telling you the truth.

Red Flag #3: You’re Forbidden to Contact Credit Bureaus Directly

One of the perks of working with a credit repair company is that you don’t have to go through the time-consuming process of contacting the three credit bureaus on your own. That being said, they should not prohibit you from contacting the credit bureaus yourself. This definitely indicates that something fishy is going on.

Red Flag #4: New Credit Identity

A recent credit repair scheme is to create a new credit identity for individuals. The problem is that it’s completely illegal. Whether the company uses fake or stolen social security numbers, or has you create an employer identification number to use for personal accounts, none of these methods are legal or ethical. File a report with the Federal Trade Commission to stop these scams before they go any further.

Pros and Cons of Hiring a Professional Company

Once you’ve found a reputable credit repair firm with a strong team and legal, ethical practices, it’s time to weigh whether or not hiring them is actually the right choice for you.

Pros

Hiring a credit repair firm does come with several convenient benefits.

Legal Experts Working on Your Behalf.

The credit repair process can be tricky and if you don’t approach it in the right way, you can actually end up doing more damage to your credit than you started with. Working with a professional team ensures you’re maximizing your legal rights every step of the way.

Major Time Saver. While the three major credit bureaus are legally required to respond to disputes within 30 days, it can be an extremely time-consuming process to communicate with them. Hiring a credit repair firm removes that burden. Plus, they’ll keep proper documentation of every interaction with the credit bureaus and your creditors to make sure everyone is living up to their responsibilities.

Cons

There are also a few downsides to working with a credit repair firm, no matter how reputable they may be.

Cost Adds Up.

The major disadvantage to hiring a pro is that the cost can quickly add up. Most agencies charge a one-time setup fee to order your credit reports and create a strategy. After that, you’re charged month by month. There’s no set timeline so you simply have to review your results and decide when you want to stop the service. Luckily, most places don’t charge a cancellation fee when you decide you’re finished.

No Guaranteed Results.

While some credit repair companies do offer a money-back guarantee, you don’t (and shouldn’t) get any kind of confirmation that your credit score will definitely improve. Plus, most places advertise that it takes at least a couple of months before you’ll notice any changes appear on your credit report. Credit repair is a bit of a gamble in terms of whether or not it’ll actually pay off.

Frequently Asked Questions

by Lauren Ward

Personal Finance Writer

Lauren Ward is a personal finance writer with nearly ten years of experience covering topics like loans, credit, and real estate. She lives in Virginia with her husband and three children.