how does credit repair work
You need good credit now more than ever
In today’s dwindling economy, multiple consumers are suffering from low credit scores. Without good credit, you decrease your ability to obtain a mortgage or car loans, rent an apartment, or even get a job. That’s why it’s more important than ever to seek viable options on how to repair your credit.
If you’ve ever been denied for anything because of your bad credit, then you know how important it is to have a high score. Whether you were looking to get a Target credit card or a car loan, getting denied is never a good feeling, and many people don’t realize the importance of having good credit until it’s too late.
So, if you have poor credit and you’re looking for a good way on how to repair it, we can help. One importrant point before we get into it is that you should make sure that you put in a strong effort to pay your bills on time and to not spend above your means during the process.
If you’re one of the millions of Americans questioning how to fix your credit, there is hope.
You can get negative inaccurate information removed with credit repair
You can improve your credit score quickly and effectively through a simple process that we like to refer to as “credit repair.”
For purposes of demonstration, we are going to assume that you are hiring a credit repair company to help you. But any of these steps can be done on your own as well.
By seeking professional credit repair services, an expert agent will evaluate your credit reports from the three major credit bureaus (Experian, Equifax, and TransUnion).
The credit bureaus have 30 days to respond to your request or they must remove the inaccurate items
Throughout the process, the agent will spot all errors, inaccuracies, and other negative items that are causing your credit score to take a dive. Then, your agent will dispute all those negative items with the credit bureaus. If they don’t provide valid evidence as to why those items appear in your reports, they’re forced to delete them within 30 days.
Here are the steps, in order, of how the credit repair process essentially will happen
First, you need to choose a reputable credit repair company. You can choose from one of the top credit repair companies that we have recommended on our site or choose your own.
You will then sign up for their program through their website. Important note: Make sure that they do not charge you upfront. It is against the law. They must provide some service for you before you make your first payment.
Within a couple of days, you will receive a call in which a customer service rep will welcome you into the service. They will then request that you pull your credit report and send it to them. Why do you have to pull it yourself? Because if anyone else pulls your report, it may negatively affect your score. And that’s just counterproductive.
Some of the companies do have the ability to do soft pulls for you without affecting your credit. Make sure you asked them for clarity on how you going to get your credit reports to them. Some may also charge a small fee for the step.
This is one good reason for hiring a professional company, because you will have true credit repair experts that will intensively review your report. Picture someone peering through a microscope at your credit report. What are they looking for? Errors. Anything from a misspelling of your name to an account that does not belong to you.
Doing this yourself may or may not be that easy depending on how many items are on your credit report.
This is where all the fun starts. After detecting all of the errors and disputable items on your credit report, the credit repair company will then dispute these items with the credit reporting agencies.
Why would the credit reporting agencies have any obligation to answer the letters? Four words: Fair Credit Reporting Act. In this act, it is mandated that all disputes received by the credit reporting agencies must be answered and resolved.
There are two outcomes, then, of these disputes: either the credit reporting agencies will prove their case with documented evidence, or they will have to remove the negative items from your report. More times than not, the latter outcome takes place.
Within 30 days of sending out the letters, you will receive responses in the main from the credit reporting agencies that most likely inform you of your removed items. And in the world of credit, negative items being removed equals a higher credit score. In no time, you will notice an improvement in your credit score and a much cleaner credit report.
Wash rinse and repeat. After all your dispute letters come back, you will start from beginning and readdress what has been removed and what hasn’t. He will then start disputing again another round following the same processes.
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Here are some important notes to understand when using a credit repair service
A lot of people have a misconception about what credit repair really is. There are no out of the ordinary special privileges that a credit repair company would have that a consumer wouldn’t. The creditor companies are regulated under the Credit Repair Organizations Act which protects consumers so that they are not misled, not charged upfront before contractual obligations are not met, and so that they know clearly what their cancellation rights are.
So these are good things to help you as the consumer. Below are a few things that are required by law, so just take note and remember these when you are using a credit repair service.
Here are some requirements by law that credit repair companies must abide by
The company must give you a written contract outlining the services that they will be providing for you
By law, they have to give you 3 days to withdraw from the contract
The credit repair company cannot advise you to make false claims, or alter your identity, which could make you guilty of fraud.
The company cannot take payment for services until it fulfills the outline and terms of the contract
The credit repair company cannot make false claims or promises to remove accurate information in return for payment
The information above was referenced from Experian. Here is the complete FTC Credit Repair Organizations Act Subchapter II-A-Credit Repair organizations section.
Good credit takes time
When it comes to your personal finances, repairing our credit is probably the most beneficial initiative that you can take. From lower interest rates to a higher likelihood of approval, raising your credit score is smart, no matter what way you look at it.
You cannot fix your credit overnight. If you have a 605 score, it won’t transform into a 720 within 14 days. However, if you take advantage of a quality credit repair company, you can drastically improve your scores within 6-9 months.
See our 10 step guide to understanding credit
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