Most of us don’t give a thought to our credit standing until things start to go wrong. It’s only then that we check our credit and discover that it’s bad and is in urgent need of credit repair. There are two ways you can approach credit repair – you can do it yourself or hire a credit repair company. Neither one is universally better than the other. Let’s understand the pros and cons of both approaches so you can make a more informed decision.
But first, it helps to recognize the signs that you may need to repair your credit.
7 Signs That You’re In Need Of Credit Repair
Consider any of the experiences below as cues that your credit is in need of repair:
1. Your credit card application is denied
2. You’re finding it difficult to get mortgage or vehicle loan approval
3. You’re finding it difficult to get loan refinance approval
4. The few lenders who do approve your loan or refinance application, quote interest rates that are much higher than their published rates
5. You’ve started receiving calls from debt collectors
6. Larger companies won’t hire you even though you have the qualifications and experience necessary for the position
7. Landlords in larger apartment complexes are hesitant to rent to you
If you’ve experienced any of these, you should check your credit report immediately to see if your credit is causing your problems. Your credit score will be the first giveaway. If your credit score is lower than you expected, you know you need to start working on repairing your credit immediately.
What Does Credit Repair Involve?
Credit repair involves addressing those errors that are hurting your score. Your score is calculated based on the information found in your credit report. This information is provided to the credit bureaus every month by your lenders and credit card issuers. All of these details get recorded in your report and are used to calculate your credit score.
Sometimes, the information is inaccurate. This can happen due to several reasons. A creditor may report incorrect or incomplete information to the credit bureau. An identity thief may have taken a line of credit in your name, resulting in an erroneous report. These inaccurate entries can result in your credit score being lower than it ought to be for no fault of yours.
Credit repair is the process of correcting these inaccuracies so that your credit score is reflected correctly. This generally involves checking your credit report and disputing any inaccurate entries with the relevant credit bureau. Credit bureaus are obligated to investigate the disputed entry, and if the entry is found to be inaccurate the bureau will correct it and re-calculate your credit score. If the entry is found to be account, it will on your report and your credit score will remain unchanged.
What Is A Credit Repair Service & What Can They Do?
Credit repair services are businesses that focus on helping individuals repair their credit report and score for a fee. Every company operates differently and their fees vary too. Most will charge you a fee every month while they work towards correcting the major issues that are impacting your credit adversely.
Generally, they will first go through your credit report and highlight issues that may be pulling your score down. Potential errors could include entries such as:
- Wrong loan or credit card payment dates
- Unrecognizable credit accounts that don’t belong to you
- Incorrect balance showing due
- Incorrect payoff status
- Old debts that should have aged off
- Debts that can’t be verified or validated
- Bankruptcy or other legal actions that aren’t yours
- Wrong employer name
- Misspellings, which may result in another individual’s negative entries being recorded on your report
When you hire a credit repair service, they will work to fix all these issues. You should see an increase in your credit score after all inaccurate entries in your credit report are corrected.
Do You Need To Hire A Company To Repair Your Credit?
No, you don’t necessarily have to hire a credit repair service. They don’t do anything that you can’t do yourself. You can request a copy of your credit report from each of the major bureaus and look for the inaccurate entries listed above. If you find any, file a dispute directly asking the relevant bureau to correct them and recalculate your score. The credit bureau is legally required to investigate the dispute and get back to you within 30 days with their findings.
This can be a complex and time-consuming process that could take several months. During this time, you may have to get in touch with creditors individually. If you decide to proceed with the credit repair process yourself, make sure you understand exactly what’s involved in the process. Also, prepare to spend a considerable amount of time resolving all the issues.
