Repairing your credit is essential if you want to be able to trade credit in the future. The cost of credit repair can vary depending on whether you hire credit repair services or do it yourself. Let’s look at both options.
First of all, it should note that it will be very difficult to obtain a loan or a credit card with a bad credit history or unfavorable information from credit agencies.
Therefore, it is essential to understand what credit repair is and how it works.
What is credit repair?
Credit repair is a process that is intended to erase unfavorable information on credit reports.
When we have had some credit problem, for example, a default, it can be reflected in our credit reports. Having unfavorable reports lowers our credit score and the image of creditworthiness in the eyes of potential lenders.
Credit repair seeks to reduce unfavorable information when this information has already been overcome. For example, if we have been included in a delinquency register, we have already paid the debt for which we were registered.
How can you repair your credit?
There are two different options, doing it yourself and having this task done by a credit repair service company.
The main difference is that you will have little cost if you do it yourself, but you will have to invest time and sometimes provide a lot of documentation. If you ask a credit repair agency to do it for you, you will have to assume the cost of their services, but in exchange, you do not have to worry about the process, as they do it themselves.
Repairing your credit yourself
When you want to go through the credit repair process yourself, the first step is to access your credit reports.
By law, you are entitled to one free annual report from each of the three major credit bureaus (Equifax, Experian, and TransUnion). You can manage this process through the AnnualCreditReport.com website.
When you have already obtained credit reports, you can thoroughly check which information is incorrect: for example, if you have already paid a debt listed. On the other hand, it is also important to check thoroughly for possible unknown credit reports. That could indicate if they exist that someone has impersonated you by opening a credit account in your name.
If all the information on the report is correct, i.e., there are no delinquencies, or everything on the information is up to date, you can’t change anything. You should wait until the information is old before removing it from your report.
Old information on a credit report can be removed after seven years, except in the case of bankruptcy, which is ten years.
You should also remember that there is no time limit for a criminal conviction. Therefore, unfavorable information will remain until the situation generated is not reversed.
If you discover that there is inaccurate information, you can challenge it. Challenges oblige the credit bureaus to review and check that the data is correct. The bureaus will review the documentation you provide, and if you are right, they will remove the inaccurate information.
In each agency, you will find specific information on how to proceed. In this case, if you are doing the credit repair process yourself, you should be patient and bear in mind that it is not a quick process. In return, you will not have to pay anything.
Credit repair by an agency
When you seek credit repair services from an agency, it is important to know that everything the agency can do, you can do. However, they are professionals and are used to battling to get results faster and more efficiently.
On the other hand, these agencies will advise you on an ongoing basis while the dispute over deleting inaccurate information continues. In some cases, they will even offer credit monitoring during the contract period.
Importantly, not all credit repair companies operate on a national basis. Some will do so only in a few specific states.
In terms of prices, there is also no unanimity. These are usually monthly fees but can vary greatly depending on the company and the level of services you subscribe to.
The most basic services can be around $20 per month, and the most comprehensive services are about $150 per month.
However, you can also find locked-in fees that refer to a specific action: for example, registration, cancellation, etc.
These agencies are faster does not mean that they will complete the process in a few weeks. It is not unusual for a credit repair to take several months. It can take up to half a year or even longer when various reporting errors occur at the credit bureaus.
One important aspect is to avoid potential scams in offers from supposed credit repair agencies. Three keys to avoiding these scams are:
- Do not pay the full amount upfront: although some agencies ask for a small application fee.
- Remember that real negative information cannot be erased: some fraudulent agencies promise to erase all negative data.
- They do not allow you to communicate with the credit bureaus: this is a clear red flag. If they are hiding the possibility of you contacting the credit bureau, they are probably handling inaccurate or false information.
Credit repair is a serious matter. You can handle it personally, but you can also use professional credit repair services. Either way, it is a slow but basic process if you want to recover your credit score.