Why Good Credit Matters
Life is great when you have good credit. When your credit is unsatisfactory, everything becomes complicated. Whether you intend to rent a house, purchase a car or, even buy a simple little mobile, a bad credit score can affect your life in various ways.
Creditworthiness matters. There are no two ways about it. When faced with a bad credit score, your only option is to fix it.
That’s where credit repair companies come in. These companies offer their services to improve your credit score in return for a payment.
Many people decide to fix their credit themselves. However, a sizable majority of people prefer to engage the services of a credit repair company because they’re either short on time or because they feel more comfortable with hiring a company.
A 2019 credit repair report reveals that around 48% of those who engaged the services of a credit repair company (for 6 months or more) saw a 100 point increase in their credit score.
How Do Credit Repair Companies Work?
Credit repair companies reduce your stress by taking the following initiatives:
Typically their first action is to inquire about your credit report. They do this by asking for your report from the three credit reporting agencies – Experian, TransUnion, and Equifax.
Their next step is to figure out any negative details on your credit report, such as charge offs and tax liens. Once the negative items have been highlighted, the credit repair company works to have them removed from your report in a variety of ways.
As to how long this process takes, the credit bureau will take 30 days to investigate any disputes that are made. This timeline is due to the fact that after the bureau receives your information, it contacts the relevant company to investigate and verify the information.
Once the credit bureau receives the information, they have to send you the results within five working days.
How Much Does it Cost to Hire a Credit Repair Company?
Before we talk about any potential costs, it is important to remember that generally, credit repair companies can not request payment until after they have performed on their promises.
Pricing will differ based on the company you choose. Most companies offer packages based on the services you will receive. The more expensive the packages offer you more services.
Also, the company may ask for the payment of a one-time flat fee, or it may charge you every month. The costs can start from $50 and go up to $130 or more.
What You Should Watch Out For
The Federal Trade Commission’s Consumer Information not only offers advice on how to improve credit scores personally but also, warns about credit repair scams.
Consumers have to be extremely careful about the credit repair company they choose to avoid being scammed. Be wary of companies that offer a ‘new credit identity’ because chances are they’re fraudulent and can get you involved in identity theft.
Make sure you are informed about your rights under the Credit Repair Organization Act and thoroughly research all your options before making a definitive choice.