Your credit score plays a crucial role in your overall financial well-being. It impacts several aspects of your financial life, such as your access to the best credit cards and the interest rates you receive on loans. Therefore, maintaining a good credit score is crucial.
However, individuals with poor credit scores often seek the help of credit repair companies. These companies make bold promises of quick fixes and credit score improvements, but is this always the case?
Now, it’s important to consider the potential drawbacks and limitations of credit repair services before engaging with them. While some credit repair companies may be legitimate and offer helpful services, others operate with questionable business practices and may cause more harm than good. As a result, it’s vital to carefully research any company before hiring them to repair your credit.
Here are 5 things credit repair companies don’t want you to know about.
1. How they operate their business
Credit repair companies offer a service where they review your credit reports for negative items and dispute them on your behalf with the credit bureaus and the organizations that provide the information, such as your bank or landlord. These negative items may include late payments, collections, bankruptcies, and other derogatory information that can hurt your credit score.
When a dispute is filed, the credit bureaus and furnishers of the information have a limited time to investigate and respond to the claim. If they fail to respond within certain time frame, the disputed information must be removed from your credit report, even if it’s accurate.
Credit repair companies exploit this time-bound process to improve your credit score. They submit disputes with the hope that the organizations won’t respond in time, resulting in the negative item being removed, thereby boosting your credit score.
2. You can do it all yourself
You have the legal right to dispute any errors on your credit reports without the help of a credit repair company. Everything a credit repair company does can be accomplished by you with minimal effort and almost no cost.
You can obtain a free credit report from each of the three major credit bureaus annually and check it for errors. If you find any errors, you can dispute them directly with the credit bureaus. This process is relatively straightforward and doesn’t require the expertise of a credit repair company.
While credit repair companies may seem like an easy solution, they often charge high fees for their services. Therefore, it’s essential to weigh the costs and benefits of hiring them versus doing it yourself. With a little effort and research, you can take control of your credit report and improve your credit score without spending any money.
3. How to dispute credit report
Disputing errors on your credit report is a simple process that you can undertake on your own. It starts with obtaining a copy of your credit report and reviewing it for any inaccuracies or errors.
Once you have identified something, you can write a letter to the credit reporting agency explaining the error and providing any supporting documentation that validates your claim. Additionally, you can submit a dispute directly to the organization that provided the information, such as your bank or landlord.
The credit reporting agencies and furnishers have a legal obligation to investigate your dispute within 30 calendar days (or 45 days in some cases) and provide a response within five business days of the investigation’s completion. During the investigation, they will review the information you provided, along with any additional evidence they may have, to determine the accuracy of the disputed item.
If the dispute is resolved in your favor, the credit reporting agency will remove the error from your credit report.
4. You can get free credit reports
Many individuals turn to credit repair companies because they are not aware of how to access their credit reports. However, it is essential to know that every person is entitled to one free copy of their credit report annually from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Therefore, you can obtain at least three free credit reports per year.
In response to the pandemic, the three credit reporting agencies have taken steps to make it even easier for consumers to access their credit reports. Throughout 2023, they are offering free weekly credit reports to help individuals monitor their credit and detect any potential fraud or errors.
To request your credit report, you can use several methods, including phone, mail, or online through the Annual Credit Report website. This free resource enables you to view your credit report and check for any errors without the help of a credit repair company.
5. Credit repair companies charge high fees
It’s important to note that credit repair is not an overnight process, and it can take several months or even years to see significant results. Unfortunately, some credit repair companies may take advantage of this fact and charge very high fees to their clients. Some companies charge upwards of $100 per month for their services, which can add up to a significant expense over time.
Additionally, some credit repair companies may try to upsell their clients on other services, such as credit monitoring and identity theft protection, which can be expensive and unnecessary. These services may add to the already high fees and put a strain on people who are already struggling financially.
It’s crucial to be cautious when selecting a credit repair company and to do your research to avoid falling victim to their unethical practices. You can also consider doing credit repair on your own, as it is a simple process that does not require specialized skills or expertise. By being proactive and diligent about your credit report, you can take control of your financial well-being and avoid unnecessary fees and expenses.
