What methods do credit repair companies use to fix your credit
Do you have a bad credit score that led to a credit card rejection? Or did you not secure a loan at the low-interest rate that you were hoping for because of your credit score? Are you wondering what you could have possibly done which impacts your finances so badly? Well, this could happen to the best of us. Sometimes even the simplest mistakes we make could sink our credit score so low that it would seem like a real struggle to bounce back from the blow.
For instance, you could have missed a payment or exhausted your credit limit for some expenses, and that could pull your credit score to rock bottom too. Don't worry. You are not alone in this. Nor are you the first person to wonder how you could improve your credit score. Did you know that there are professional agencies that could help you with the process? Yes, we are speaking about credit repair companies, which use strategic methods and their expertise to improve your credit score. Here's how they work.
A genuine credit repair company will do a free evaluation of your credit report. This is to give them an idea about your financial history and guide you on how to fix bad credit so they will look for any negative information, wrong charges, etc., ruining your credit score. Based on these aspects, they will understand if you are a candidate whose credit score can be fixed.
On the other hand, there are credit repair scamster who will convince you that they can improve your credit score overnight. Do not fall for these as credit repair is a time taking process. Also, be wary of paying any upfront charges for the credit report or evaluation, as this consultation should be free of charge.
Often our credit reports could have false information, wrong charges, and other errors. Besides this, there could also be duplicate charges, mistakes in the payment history, and a charge for an expired card or account. The credit repair company will go through your reports from the past few years to look for these items. When they find such errors, they report them to the authorities and have them removed from your credit card. This will contribute to improving your credit score considerably.
The credit report company will take care of all the paperwork, documentation, and reports on your behalf. They will handle all the correspondence with the bureaus to determine if these items can be removed. This could be a time-consuming process and take over a few weeks for the results to reflect in your credit report. The bureau will only delete those records which have been falsely included in your account. If a company promises to have even accurate but negative information removed, that could be a red flag. Do not engage with them as you could land in trouble.
This process is called debt reconciliation, where the agency would pool all your credit card and mortgage debts into one big loan. This helps because the interest rate on a few loans or credit cards could be higher. The credit repair agency will help you pool all your debts into a low-interest longer-tenure loan and repay the other loans from this money. This way, you will have just one loan to deal with. Repaying it would be relatively easy, and you would not get into financial woes.
However, taking a new loan could lower your credit score temporarily. But when you start repaying your other mortgages and bills, you will notice that your credit score is improving.
The most common cause of a declining credit score is missing the repayments cycle. Even a 30-day delay could have a significant impact on your credit report. A credit repair company would not just help you with rectifying errors. They would also help you avoid a credit score decline in the future by building a repayment strategy.
This will ensure that all your mortgages, loans, and credit card bills are paid on time. Although you do not have to repay the entire amount, even a part payment over the months will help you improve your credit score.
A credit repair company can help you dispute faulty claims and get them deleted from your credit report. But this does not mean that you could have everything that hurts your credit report deleted. Trying to delete accurate but negative information could have your profile flagged and impact your borrowing capacity in the future too. So, never try to do this, or engage with a company that suggests you try this.
Rectifying your credit score with the help of an agency does not mean that the change would happen overnight. Your credit history and transactions stay in the report for over seven years. It would take a few weeks or months for the credit score to improve.
If you are in the habit of overspending through your credit cards, it could make sense to follow this advice. But this could do more harm than good to your credit score. While the history of missing payments will continue to exist and pull your credit score down, the positive remarks and repayments will also be there, which are essential for a good credit score. When you cancel a credit card, you let these transactions disappear too. Besides, the longer the duration of your credit card possession, the better it is for your credit report. So, never cancel a credit card to improve your score. Instead, consciously cut down your spending.
One of the most prevalent credit repair scams promises users a brand new credit identity with a new social security number. This is to make sure that your old debts do not follow you around. However, this is a federal crime, and doing it could land you in prison.
A credit report company can strategically help you improve your credit score. While it is possible to do all these processes independently, taking professional help will ensure that you are not lost in the process of collecting documents and paperwork.