When you’re struggling to manage debt, credit repair companies may promise a quick fix to get your credit back on track. However, it’s important to know that repairing your credit is a process that takes time. Whether you’re looking for help with debt management or to resolve errors on your credit report, the best credit repair company will have a clear price structure and a track record of success. The most reputable credit repair companies will also follow Consumer Financial Protection Bureau (CFPB) rules. These rules include not demanding payment before providing services, and not charging fees for services that haven’t been fully rendered. The CFPB has more information about how to avoid credit repair scams.
Inaccurate information on credit reports is a common problem. It can lower your credit scores and make it difficult to obtain financing, even if you’re working hard to pay off debt. There are a few things you can do to improve your credit without the help of a credit repair agency, including disputing errors on your own and seeking free or low-cost credit counseling.
Before credit reporting became standardized, small local agencies kept profiles on consumers to track their borrowing and debt-payment habits. These profiles were then used by local banks to underwrite loans and determine whether a loan applicant would be approved. When the Fair Credit Reporting Act was passed in 1970, it protected consumers’ rights to a fair and accurate credit report. It also granted them the right to dispute inaccurate information. Credit repair companies work by contacting the credit bureaus on behalf of consumers to challenge errors in their credit reports. Usually, this involves sending multiple letters over a 30-day period to the credit bureaus, asking them to remove incorrect or outdated information from your file.
A reputable credit repair company will charge only when its services are delivered. Depending on the service, this could mean a monthly subscription or charging you once an error is removed from your credit report. Some services will also provide you with a nine-digit number that looks like a Social Security number, called a credit privacy or credit profile number. This isn’t a valid Social Security number and it could be a sign that the company is using a stolen identity to defraud you. In some cases, these scammers may also advise you to change your name or use an Employer Identification Number (EIN) from the Internal Revenue Service in place of your Social Security number. This is illegal and can lead to federal prosecution.
In addition, the length of time it takes to improve your credit can vary widely based on your individual circumstances and the responsiveness of the credit bureaus and creditors. Some problems may be solved quickly, while others may take a few months or even a year to resolve. Regardless of how complicated your credit issues are, the key to successful credit repair is being patient and consistent with your efforts. credit repair website