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