Can a Credit Repair Service Really Fix Your Credit?

Are you facing issues from your past that are weighing your credit report down? If so, a repair service might be of some assistance. However, many Americans are still unaware of what these companies actually do. So before you draw any conclusions, it is important to understand how these services can help you fix your credit.

It’s also important to educate yourself on what a credit repair service does not do. That is, they don’t focus on building your credit rating, nor do they help with consolidating debts. It is all about fixing erroneous credit reporting issues. While there may be adverse effects (maybe your score goes up), this is not the main purpose of a credit repair service.

Fix Your Credit

What Do Credit Repair Companies Do?

A credit repair company will try and fix any damage on your credit report. This is done by collecting a copy from each bureau for analysis. The service provider will carefully comb through and try to identify errors. It could be anything, such as HR reporting errors at work or signs of identity fraud.

The FTC reported that one in 20 American consumers have credit report errors. Of that group, one in 20 saw a 25-point or more score increase by fixing the error. A further one in 250 saw a 100-point or higher change afterward.

Fixing any negative items on your credit report can be very profitable. A shift in your score could result in thousands (or more) in interest savings. Just think when it comes time to buy a home, how much could you be losing to negative items?

Fixing Negative Items the Right Way

Credit repair companies are experts at managing credit report errors. This hands-off solution leaves you not having to worry about the outcome. It also means saving endless time on handling the issue. After all, the average amount of time spent to fix an identity theft issue is 30-60 hours.

By hiring a company to do it for you, the entire process becomes painless. Here are the steps that are typically taken to repair your report:

1. Request a copy of your Equifax, Experian and TransUnion file

2. Compare data with you to see if there are any inconsistencies

3. Point out any errors which should be reported and removed

4. Report such errors to the respective credit bureaus

5. Follow up and work with the bureaus till its resolved

What Types of Credit Report Errors?

Every error should be taken care of as it is found. Failing to do so can increase your risk of becoming an identity theft victim. It could also prevent you from qualifying for a credit card or loan — particularly if your score is suffering from the error.

Some items a pro might dispute in order to repair their credit include:

•    Information that is no longer current

•    Inconsistencies between each bureau’s file

•    Reporting errors from your work’s HR department

•    Non-updated information after a divorce

•    Wrongly reported late payments and charge-offs

Credit repair services also help with bankruptcy procedures and post-bankruptcy recovery. There are many things that come into play when making sure your file is clean and up-to-date. For example, sometimes discharged debts are reported incorrectly. They should always have no balance and a reference to why.

Can You Fix Your Credit Errors Yourself?

It is always an option. However, the best credit repair companies have spent many years doing this every single day. It will take you longer and the chance of success is a little or lot lower, depending on the circumstances. You will have to learn how to dispute credit report errors from scratch — which takes even more time.

The easy thing is finding the errors. You can help a credit repair agent with that process. From there, it becomes clear what the path forward will be. Some errors just require an update of your information (i.e., address changes). But others are more serious and require negative item removal.

Furthermore, there are many things you might not be aware of that are actually errors. One such example is if you close an account yourself and the entry says that it was closed by the grantor. This can hurt your credit score as it appears that there was a reason for them to stop doing business with you. Removing the “grantor” label would potentially increase your rating and it makes you look better.

Of course, there are some situations you can handle without help. For those that already know their errors, try contacting the credit-reporting company that caused it in the first place. Sometimes you can mitigate the issue right away. But definitely hire a professional if you have a lot of errors or if the damage goes back years.

Conclusion

Credit repair services offer legitimate solutions. However, too many borrowers are unaware of what these businesses provide. It is something that you should seek out after bankruptcy, credit fraud or identity theft. Sometimes it is even necessary once you go through a divorce — especially if you carried extensive joint debts.

The bottom line is, don’t let errors on your credit report hold you back, fix your credit. Hiring a professional credit repair service will save you time, money and may even improve your credit score along the way.

Sources:

https://www.ftc.gov/news-events/press-releases/2013/02/ftc-study-five-percent-consumers-had-errors-their-credit-reports

http://www.experian.com/blogs/ask-experian/debt-discharged-in-bankruptcy-continues-to-show-in-credit-report/

https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-identity-theft-program/synovatereport.pdf

Credit Limit Increase – How and When Should You Request

A credit limit increase is a net-positive scenario for your credit rating and report. You just have to avoid spending your balance and carrying a higher debt. If you can accomplish that, your credit limit increases will benefit your utilization rate. This is huge as it accounts for 30 percent of your FICO score calculation.

However, there is always a right and wrong time to try for a limit increase. You need to know the best approach for this process before moving forward. To understand more, read the advice found below.

Credit Limit Increase

 

How You Request a Credit Limit Increase

You can call the support line for your credit card issuer. From there, it is possible to inquire about adjusting your limit higher. This might result in a hard inquiry, but it is not always necessary. It all depends on your card provider and the strength of your credit report on your initial application.

Some card providers even offer the chance to request a limit increase online. Check your dashboard for this option to find out more. Also, take a look below for an idea on which card issuers require a hard inquiry to qualify.

Hard vs. Soft Inquiry, What Will Your Card Issuer Do?

Many cases vary based on the amount of the increase. For instance, anything above $1,500 through Wells Fargo typically requires a hard pull. Below that amount, however, would be a soft pull.

Here’s a look at what to expect from many popular card issuers:

  • American Express: No hard inquiry is required.
  • Bank of America: Usually a hard inquiry through TransUnion.
  • Capital One: No hard inquiry is required.
  • Chase: A hard inquiry when you request an increase.
  • Citibank: Some increase requests require hard inquiries.
  • Discover: Larger increases require a hard inquiry.
  • USAA: Usually a hard inquiry through Equifax.
  • S. Bank: Larger increases require a hard inquiry.
  • Wells Fargo: Certain cases require a hard inquiry.

Of course, these claims are not set in stone and can change with time. Your issuer might treat your situation different than others. It is best to ask first. If you are offered a credit limit increase suddenly, chances are you are pre-approved and the inquiry might not be necessary.

When to Ask for a Credit Limit Increase

You can ask your card provider for an increase at any time. The likelihood of approval will boil down to your credit history and your repayment history with that company. Sometimes there will be a hard rule in their system for accepting increases, such as only after so many months.

If your credit score is less than perfect, you might not hear about the possibility of increasing your limit any time soon. You can always ask your card issuer to see if there is a typical time frame for when the offer increases.

Tip: Wait until you get your first increase from the card provider, as it is likely to happen, and then inquire 3 to 6 months later about a further increase.

Requesting Credit Limit Increases on Secured Cards

This is where things get a little tricky. Secured cards do not work the same as unsecured cards. Some can transition into an unsecured card, and you might get your security deposit back, but not all issuers offer this.

You need to look for a secured card that converts to unsecured. This action lets you continue with the same credit line, which won’t hurt your average account age. You can take on the higher limit as well and get the utilization rate boost. Plus, it gives you the chance to give a higher deposit to build off.

What to Avoid When Asking for a Credit Limit Increase

First off, you should not make it look like you need the extra money. It should be about growing your overall credit availability and proving yourself with higher balances. This is necessary to show that you are a good borrower, beyond a measly $300 or $500 credit card. It will help you with proving yourself to an auto or mortgage lender, too.

The biggest sign of needing the extra cash flow is requesting the increase when your balance is near the limit. This shows you potentially cannot repay what you owe right now and that you might need extra financial assistance at the moment. So bring your credit utilization rate for that particular card to 30 percent or less.

You can always put the balance on a difference card for the month leading up to when you inquire about raising your limit. This is even more effective if your card issuer does not plan to pull your credit file. However, if a hard inquiry is necessary, it is better to reduce your overall debt load before you inquire.

Conclusion

Credit limit increases are golden opportunities for people looking to build credit. But it can be hard to get them if you have a lower credit score. You never want to deal with rejection, and hard inquiries can hurt your credit. However, the better credit utilization rate and long-term effects make it all worthwhile.

Take your time to plan out when and how you ask for a credit limit increase. Your issuer wants to make more money — so chances are you will get an offer soon enough. But you should still learn how your issuer typically handles increases and make your own request when it seems right.

Sources:

http://www.doctorofcredit.com/credit-cards/which-credit-card-companies-do-a-hard-pull-for-a-credit-limit-increase

http://www.doctorofcredit.com/increase-the-limit-on-your-american-express-card-by-up-to-3-times-its-starting-amount/

http://www.magnifymoney.com/blog/building-credit/convert-secured-card-unsecured-credit-card/

https://www.nerdwallet.com/blog/credit-cards/credit-limit-increase/

Credit Report Errors: Why, How and Solutions to Fix My Credit

Credit report errors can happen to anyone. It affects roughly 25 percent of files in the United States. This statistic is high enough to cause alarm, and one in 20 files have errors that cause financial damage. A small percentage of these instances involve borrowers with wrongfully reduced scores of 100 points or more.

Credit Report Errors

Check for Credit Report Errors First

If you’re concerned, check each of your credit reports (Equifax, Experian and TransUnion) to see if there are any incorrect entries. Begin by scanning for information that doesn’t line up properly. There might be different balances, payment dates or your account might not even show up.

Keep in mind: credit-reporting companies are only required to provide information to one of the three bureaus. It’s possible to have details and accounts on one file that aren’t on the others. This is a leading cause of credit report errors and it’s not always easy to fix.

You can get your files from www.AnnualCreditReport.com, the government-authorized source for your free annual report. This is a right for American consumers, thanks to the Fair Credit Reporting Act (FCRA). If you’ve already requested a file and you want more current information, you can pay a nominal fee to each bureau for a fresh copy.

Common Types of Credit Report Errors

Sometimes, a credit report error is because of an innocent mistake by one of your credit card providers or lenders. Other times, it might be a mishap with your work’s accounting department. Worst case scenario, the errors on your report are a sign of credit fraud or identity theft.

Regardless of the details, any wrongful entries on your credit report should be taken care of immediately. If not, it’s possible for the negative effects to carry on for years — while keeping your credit score down in the process.

Take a look below for some tips on clearing up certain types of errors.

How to Handle Mismatching Credit Reports

Unfortunately, you can’t force the reporting company to notify the other bureaus if they only reported to one. This can put you at both an advantage and a disadvantage.

It’s beneficial if you have negative items and they only show on a single file. However, it can be a serious setback if your positive items are not there. It can result in your FICO score dropping — which means more rejections and higher interest premiums.

Your best bet is to contact the credit-reporting agency. You can request that they report to the other bureaus. If they won’t, there’s little you can do, “by force,” to make it happen for you.

How to Remove Outdated Information

Your credit report can only contain negative items for a set time frame. After the period runs out, you’re allowed to request removal of any items that still show. To do this, you must send a dispute letter to the respective credit bureau(s). This is also the standard process for dealing with errors. Outdated information is different since it’s so easy to check and prove, so no further information is needed.

You’ll hear back in 30 days or less with a decision. If you have a delinquency stated on your file, inside the acceptable reporting period, you’ll have to prove to the bureau that it’s incorrect. In most cases, this happens when debt goes to a collections agency — as it gets reported with a delinquency, inaccurately, on a more recent date.

How Long Does It Take to Fix Errors?

The FCRA states that the credit bureau you send the dispute letter to must get back to you within 30 days. They’re required to investigate your claim and determine whether there’s any accuracy to it. The simpler issues tend to get fixed right away, but it’s possible you’ll be asked for more documentation.

Should You Use Credit Repair Services?

Credit repair companies focus on fixing your credit report, not your score. The goal is to make sure that all information matches up between each of your credit files. It means an expert will work with you to go through all your credit reports. They’ll have a much better eye for finding errors.

However, most of the time, you can identify the errors yourself. It only becomes important to consider hiring a credit repair agency when fixing the problem. This will save you a good 30-60 hours in paperwork, phone calls and other tedious processes. It also means you have a greater chance of removing the error, as your case will be represented as best as possible.

Credit report errors are always a headache. However, you don’t have to stress over the situation too much. Credit repair professionals can take all the manual work out of the reparation process. The law is also by your side when it comes to removing inaccurate negative items.

Things will only get more confusing if you’re dealing with fraudulent entries. In this case, you might need to supply police reports, FTC Identity Theft Affidavits and much more. The problem could take 100s of hours to resolve as well, which is when a credit repair expert can really save the day.

Sources:

https://www.consumer.ftc.gov/articles/0155-free-credit-reports

http://www.wisebread.com/heres-why-credit-scores-and-reports-are-not-the-same

https://www.creditkarma.com/article/credit-report-differences

https://www.thebalance.com/removing-old-debts-960491

https://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report

http://www.cnbc.com/id/100449912