What You Need to Know If You’re Considering Credit Repair
Many people turn to credit repair agencies for help improving bad credit and disputing errors on their credit reports. It may sound simple, but it’s important to understand what these agencies actually do. Here’s a quick breakdown:
- The credit repair company pulls your credit reports from each of the three major credit bureaus and reviews them for errors or negative entries that can be negotiated for removal.
- With errors identified, you provide the company with supporting documentation to prove the entry in the credit report is an error. If it’s difficult to provide adequate documentation, a reputable credit repair company will be able to advise you on what to include as supporting documentation.
- Armed with your supporting documentation, the credit repair company files a dispute with the credit bureaus and provides all necessary documentation. Credit bureaus have 30 days to investigate disputes.
- During the investigation period, credit bureaus may remove the negative entries in question from your report, which can cause your credit score to improve. However, if the bureau’s investigation finds the negative entry is accurate and adds it back to your report, any positive effects on your credit score may prove temporary.
There are no guarantees with credit repair. Your credit may or may not improve. If it does, many factors may cause your score to fall again, including late payments or applying for new credit.
What to Look for with Credit Repair Companies
You’ve likely seen advertisements from credit repair companies that make big promises to improve your credit. Sounds too good to be true, right? That’s because it is. Federal law forbids credit repair firms from making such promises or guarantees with their services. Additionally, the Federal Trade Commission forbids credit repair firms from charging before credit repair work is complete.
If you are considering credit repair, you want to work with a legitimate credit repair firm. Here are a few key things to look for when evaluating your options:
Can I Do My Own Credit Repair?
While reputable credit repair agencies can save you time, there’s nothing they do that you can’t do yourself. With patience and perseverance, you can tackle do-it-yourself credit repair. The process is the same as if hiring a credit repair firm:
- Obtain copies of your credit reports from the three major credit bureaus — TransUnion, Experian and Equifax — and review for any errors or negative entries. You can get free credit reports annually at AnnualCreditReport.com.
- If you find errors or invalid entries, you can begin the dispute process. Each credit bureau has a link on their website to initiate a dispute. You also may call or submit a dispute via mail. Here is an example of a dispute letter. You may have to provide documentation to support your claim of the disputed errors.
- The credit bureaus have 30 days to investigate and respond to disputes. During the investigation period, the credit agencies may remove the disputed entry. This likely will have a positive effect on your credit score. But it may be temporary if the credit bureau finds the disputed claim to be accurate and adds the entry back to your credit report.
We know credit repair can be time-consuming and complex. If you’re leaning toward credit repair, here are some resources to help clear up confusion and prepare you for what to expect:
Assessing Next Steps in Debt Relief
If you’re unsure where to turn, start with a free and confidential credit counseling session. We will review your income, expenses and debts to determine the best course of action.
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You can also call us Monday – Friday from 6 a.m. – 6 p.m. MST at 866-528-0588 to speak with a certified credit counselor.
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