Credit repair services help consumers with bad credit get back on track. They work to fix errors on a consumer’s credit report that can hurt their score and help them negotiate with creditors or debt collectors to settle or remove unpaid accounts. Credit repair services can also help consumers create a plan to pay off debts and build up positive payment histories. Many of these services charge fees, which can add up quickly.
According to the Consumer Financial Protection Bureau (CFPB), more than half of complaints about credit repair services involve alleged fraud or scams. When choosing a credit repair service, it’s important to be aware of the red flags that can indicate a scam, such as demanding payments upfront or promising results that sound too good to be true. A reputable company should follow the laws set forth by the Credit Repair Organizations Act and provide consumers with a written contract that clearly describes their services.
A reputable credit repair service should also allow consumers to dispute items on their credit report online and via phone or mail. They will also verify that the disputed items have been resolved before charging any additional fees.
In addition to assisting with the removal of inaccurate information on credit reports, credit repair services often help consumers create a budget and develop a plan to pay off debt in order to improve their credit scores. They may also assist with negotiating with lenders or debt collection agencies to lower interest rates on existing debt, waive late payments and other penalties, or agree to settle disputed items.
While credit repair services can be helpful for people with bad credit, they are not a necessity. It is possible to clean up a credit report with a little effort on your own. The best way to do this is by examining your credit reports and disputing any errors that you find. You can do this by visiting the website of each of the three credit reporting agencies to initiate a dispute online.
Lastly, you can also contact the credit bureaus directly to request corrections to inaccurate information on your credit report. While this method may take more time, it is a viable option for people who are not comfortable or able to dispute inaccurate information on their own.
In addition, you can always try a different approach, such as seeking free or low-cost credit counseling from a nonprofit organization to receive guidance and a plan to address your credit challenges. It is also a good idea to periodically download your credit reports and check for any changes that you haven’t already made on your own. For example, if you disputed an item and it was removed from your credit report, download a copy one year later to ensure that the information has not reappeared. Then, you can make further adjustments on your own if needed. The more diligent you are about addressing your credit issues, the more likely your score will rise.