Credit repair is the process of hiring a company to correct your bad credit by removing inaccurate and negative information from your credit reports. Legitimate credit repair companies can ensure that inaccurate information is removed from your credit reports so that it doesn't hurt your credit rating. 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. 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. If the information is accurate, there is little that anyone, even a professional credit repair company, can do little to change it. This can happen when creditors report misinformation to the credit bureau or if an identity thief takes out credit in the consumer's name.
Credit repair companies are not allowed to hide the above notices in the language of their contracts. Remember that even if you pay to have information removed from your credit report, there is no guarantee that your credit score will increase. The theory with pay-for-elimination is that it keeps the customer satisfied because it only pays for tangible results, and the credit repair company stays on the right side of the CROA because it doesn't charge its customers until the results have occurred. 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.
Credit repair companies make sure you know when these items are recalled, but they don't tell you when they reappear. A credit card company will review your credit report information for you and look for any errors. And finally, credit repair companies are not allowed to force or entice you to sign a waiver whereby you would waive some or all of the above rights. Credit scores are calculated based on information in the consumer's credit report and sometimes that information is inaccurate.
The goal of these companies is to build their credit by disputing outdated or incorrect information in their credit reports, tracking results and monitoring to ensure that errors do not reappear. The intention is for credit bureaus or providers to delete credit information altogether or modify it in a way that is more favorable to the consumer. Historically, mail has been the preferred method for credit repair companies for several reasons. Typically, these companies offer to review your credit reports and address any negative elements they can with credit bureaus on your behalf.