Utilizing a Credit Repair Service: Timing and Selection Guidance
If you have inaccurate or unverifiable negative items on your credit reports, they can severely impact your credit scores. This can make it tough to get approved for loans, credit cards, rental housing, or even a job. However, if you can prove that these negative items are incorrect or unsubstantiated, you have the right to dispute them and have them removed. This process can be time-consuming and complicated, which is where credit repair services come in.
What credit repair companies do
These services work on your behalf to challenge errors, outdated information, and unverifiable negative items with the credit bureaus and creditors or data furnishers reporting the information. The Fair Credit Reporting Act (FCRA) requires credit bureaus to investigate allegations of inaccurate or unverified information on a credit report. If a creditor cannot verify the negative item, it must be removed.
Here are some examples of negative items that could potentially be removed through credit repair efforts:
- Misreported late payments
- Charge-offs and collections for debts you never actually owed
- Duplicate negative entries reported multiple times in error
- Debts or negative items too old to be reported anymore (generally 6-7 years)
When to consider a credit repair service
You might want to consider using a credit repair company if you have valid negative items on your credit reports that are dragging down your credit scores. This may include:
- Multiple late payments you did make, preventing credit score recovery
- A high debt burden and maxed out credit cards harming your credit utilization
- Past delinquencies, charge-offs, repossessions, or other major derogatory marks
While credit repair can't erase accurate negative information, it can help remove incorrect data that shouldn't be on your reports anymore.
Using a credit repair service
When you sign up for a credit repair service, they will request copies of your credit reports from all three major bureaus. You'll need to provide evidence to support any challenges to inaccurate information. The company will analyze your credit reports, recommend which items to dispute for maximum impact, and send official disputes and documentation to try to get these items removed. Credit bureaus have 30-45 days to investigate and either confirm or eliminate the items in question.
Fees for credit repair typically fall into one of two categories. You might pay a one-time flat fee based on the number of items removed, or pay a monthly fee for ongoing services. Prices may range from $35 per deletion up to $750 or more. Some top options to consider include:
- Credit Saint: $79.99 per month
- The Credit People: $99.99 per month
- Lexington Law: $99.99 per month
Be cautious about companies asking for significant upfront fees—this could be a scam. With professional help, credit repair can make a big difference in improving your credit standing by fixing errors and removing unnecessary negative items. And if you're struggling with low credit scores, you can also try these strategies to boost your credit.
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Source: lifehacker.com
