Credit repair companies are in the business of helping you remove outdated and inaccurate information from your credit reports. While it’s true there are businesses running dishonest practices, plenty of legitimate credit repair companies are available to work for you. Read on for information about finding a legitimate credit repair company.
Identifying Legitimate Credit Repair Companies
Understanding what makes a credit repair company legitimate is predicated on knowing what it shouldn’t do. For example, a legitimate credit repair company will never ask you to pay upfront, nor will it ever promise you a certain credit score.
By contrast, a legit credit repair company will:
- Provide a written contract. Get the details of your partnership in writing so you have documentation of what you can expect.
- Explain your credit-related rights, which include suing a credit repair company that violates the Credit Repair Organizations Act.
- Encourage you to directly contact the three credit bureaus (Experian, TransUnion and Equifax) to dispute wrong or inaccurate information on your credit reports.
- Direct you to be honest when providing information on a credit card or loan application.
- Provide you with a three-day cancellation window without charge if you want to end service.
- Give you an estimate of how long the credit repair will take. The more items that need to be disputed or removed, the longer the timeline will likely be.
Credit Repair Company Costs
There are a couple of different ways legitimate credit repair companies structure their fees. You can hire a legitimate credit repair company for about $79 to $129 a month, and some charge a setup fee.
Other companies simply charge an initial fee and then another fee for each derogatory mark it removes from your reports. In this scenario, the fees typically start at $35 per mark.
As your advocate, the credit repair company will work to have wrong or outdated marks removed. If these actions raise your credit scores, then you’ll be positioned to receive more favorable interest rates, which will, in the longer term, save you money. This cost saving can quickly offset the fees associated with hiring a legitimate credit repair company.
Research Credit Repair Companies
A Google search will give you the names of several credit repair companies, but the list alone isn’t enough. Dig into the information to see which ones have a long operational history, favorable track record and good score with the Better Business Bureau.
Do I Really Need a Credit Repair Company?
There’s nothing a credit repair company can do that you can’t do on your own. It just takes time, patience and work. If you’re willing to put in the effort, you can be just as effective as a credit repair company. Follow these steps:
- Start by pulling your credit reports from all three bureaus and reviewing the information.
- Dispute any errors with the credit bureau. Approximately 79% of consumers who disputed an error had a change made to their reports. Errors may include accounts that aren’t yours, payment history mistakes, name misspellings, wrong dates or debt that has passed the seven-year mark.
- Pay off your debt on time to reduce your balance and improve your credit utilization ratio.
- Resist new credit card offers, and don’t go loan shopping. Every new credit application will trigger a hard inquiry on your credit report which can reduce your credit score.
Legitimate credit repair companies can be a silver lining to the dark cloud of bad credit, but choose wisely. A legit company will follow the rules — and keep your best interests front and center.
