Credit repair services promise to improve your credit score and get errors removed from your report. While these companies may be able to help, many are scams. Some even violate federal laws and will take your money without doing anything for you. Scammers prey on people who are desperate to fix their problems, and the credit repair industry is no exception. The best way to avoid being scammed is to find a reputable company and review their service before signing up.
To do their jobs, credit repair companies need to be able to review your reports and communicate with the bureaus and creditors on your behalf. This can be done via the internet, phone or U.S. mail, but the latter has historically been the preferred method for credit repair companies. In general, credit repair companies start by reviewing your credit report to identify errors or inaccurate information. Then they will make a list of those items and contact the credit bureaus or data furnishers to dispute them.
This process can be time consuming, especially if you have a lot of incorrect or outdated information on your report. It also takes patience, as the credit bureaus typically have 30 days to investigate your disputes and must communicate their findings back to you within five business days. If the credit bureau determines your dispute is frivolous, it must tell you that, but it may also decide to simply delete the information from your report instead of investigating further.
The best credit repair companies will work to remove inaccurate information on your credit report, such as accounts that don’t belong to you or negative entries that aren’t accurate. They may also work with creditors to settle disputed debt or try to negotiate with them to have positive information added to your report.
Some credit repair companies charge a flat monthly fee for their services, while others work on a fee-per-delete basis, where you only pay when an item is successfully removed from your report. Still, if you have a lot of errors on your report, it could be worth paying for the convenience and expertise of a credit repair service.
A good credit repair company will provide you with a clear contract that lists the services they will perform, how long it should take them to do their work and any guarantees or refunds available. Before you sign any contracts, check online reviews from trusted sources like the Better Business Bureau (BBB), Yelp and Google. You should also compare prices between credit repair services, as some will offer discounts or other promotions to lure new customers. If you’re unsure about which one to choose, request a free consultation from each and see what each has to offer. You can always walk away from the contract without penalty within three days of signing if you’re not satisfied.