Your credit score is one of the most important indicators of your financial health. A high credit score can open up huge opportunities and milestones. At the same time, a low credit score can hold you back or even cost you countless dollars in skyrocketing interest rates. It’s safe to say, that your credit score has a lot of control over your financial well-being.
Thankfully a low credit score doesn’t spell doom for you. With credit repair services, you can get the help you need to boost your score and find the stability and the flexibility you need to reach your life goals. We’ll look at the process behind restoring your credit, and which companies are offering the best restoration options.
What Does Repairing Your Credit Entail?
The process of credit repair utilizes your rights as a consumer to a fair and substantiated credit report. In many cases, aspects of your low credit score are a result of errors on your report that is generated by the three major credit bureaus.
Whether it’s an incorrect entry, or an outdated issue that’s been resolved, these items can be removed through the proper processes. While it is possible to DIY your credit repair, it can take a lot longer this way, and you may not experience the results you’re looking for.
A large part involves filing the correct disputes on elements of your report. To win these disputes, you must also provide the proper documentation and in some cases cite the correct credit laws.
All of this is something credit repair companies don’t expect you to know or understand. Therefore the dispute could end up going in their favor. With a credit restoration service, you can leverage the knowledge and experience of credit professionals to ensure that a single second isn’t wasted.
Ultimately, credit restoration companies leverage your right to an accurate, fair, and substantiated report. Some of these repair services will try to simply get results from disputes with the bureaus, but top-notch companies will go further and communicate with your creditors directly.
A perfect example of how a company could help you, is a situation where a collection has been sold to multiple collection agencies. You may not know this, but those sales may appear on your report numerous times. While one of these is correct, having multiple entries can hurt your score unfairly. By targeting and eliminating these errors or unfair elements, credit repair can absolutely help you recover some of your score back.
In many cases, these items will stay on your report for 7-10 years. Without the help of a credit repair service, you could have these errors dinging your credit score consistently for the wrong reasons.
How Do Credit Repair Services Work?
Studies done by the Federal Trade Commission in the past have found that 1-in-5 consumers have at least one error in their credit report that they are unaware of. High-quality credit restoration services start by pulling your reports from each of the main credit bureaus:
How they obtain these reports differs slightly from business to business. In some cases, they will request the information themselves from you, and in other cases they will have you send them the reports.
Why do they need reports from all three credit bureaus? This has to do with how each bureau functions. While they all essentially do the same thing, how they go about their tasks differs between each of the three.
Through sources known as “data furnishers” the bureaus collection information on your credit history. These furnishers include lenders, credit card companies, debt collectors, and others. The bureaus then compile this information into a report on your overall credit history and sell it back to potential lenders.
Since the three major bureaus all use unique and varied sources for their data furnishing, the reports they generate will differ from one another. The most accurate way to repair your credit, is to make sure the service has access to all three reports for contrasting and comparison purposes.
Once the credit repair service has identified these errors, the next step is to compile any supporting documents or information that could be used to give you an edge in the dispute. This is where it pays to have experience on your side. While something simple like a duplicate charge would only require your statements, a more complicated issue like identity theft would require more specific documents.
The representatives of the credit repair company you’re working with can help you pinpoint the proper documents. This will ensure you have the best chances of being successful in your disputes.
Once all of this information has been collected and organized, the representatives file disputes with the creditors and bureaus accordingly. During this process, the service you chose will work with the bureaus and creditors to ensure any negative and unfair items are removed from your report.
Laws like the Fair Debt Collection Practices Act and the Fair Credit Billing Act are just some of the laws they will use in your favor during this process.
How Long Does Credit Repair Take to Improve Credit Scores?
Credit scores are judged in a huge number of ways, and the scales differ between all manner of measurements. That being said, it’s a universal fact that negative items will have a detrimental effect on your credit score. Removing these can and will improve your score, but the timeline isn’t something anyone can promise.
Credit bureaus have 30-days to respond to disputes (45 in some cases). Once the dispute is resolved, the item can then be removed from your report. Of course, depending on the complexity of the dispute, it may take more than one round of investigating to solve the problem.
Since credit and scores are so complicated, it’s simply not possible to accurately predict when or how a credit score will change. Any credit agency that promises a specific timeline is probably not a legitimate one.
The best way to see how credit repair has benefited others is to look at the past clients the agency has dealt with. How were their results? This will give you a good idea of what you can expect from your experience.
In the end, removing these items will showcase some sort of positive effect on your score in some way, shape, or form. Typically, you should see results within a month or two after you’ve successfully resolved disputes and errors on your report, but again, this is just an estimation.
How to Find Trustworthy Credit Restoration Services
There are numerous credit providers currently offering their services to customers. Some of them will make promises like “100-point jump within 30-days,” and so on. If this sounds fishy, that’s because it is. It’s actually illegal for a company to promise results like this.
In addition, the FTC (Federal Trade Commission) prohibits companies from charging for credit repair before they’ve completed any work. That’s why legitimate companies won’t ask for money up front or promise specific results.
Since credit decides whether you can buy a car, a house, or even earn a job, it’s something that many will try to deceive people with. To avoid this, you should always look for signs of legitimate credit repair companies.
Here are four signs that you’re dealing with a reputable company:
1. No Upfront Costs
As mentioned before, it is illegal for a company to charge for credit services before they are performed. A major red flag should go up if the company is asking for a large sum of money upfront, in return for a very specific result.
What happens here, is they take your money and run. You’ll also notice that, in these case, the upfront cost is in the thousands of dollars. This is another sign of a scam, as credit repair is typically much more affordable and done on a monthly subscription basis.
Many people fall for these scams out of sheer desperation, but don’t let your fears of bad credit blind you from situations like these. The Credit Repair Organizations act states that “no organization may charge or receive money or other valuable consideration for the performance of any service which the organization has agreed to perform for any consumer before such service is fully performed.”
2. Your Rights Are Explained
Regardless of whether you choose a service or not, everyone has a basic right to see their credit reports and dispute any items they believe are not fair, substantiated, or reasonable. Ultimately, anything a credit repair service does, you can also do yourself.
That being said, the experience and knowledge of a credit repair company can drastically improve your chances of being successful. Regardless, the service you choose should inform you of these rights as per the Credit Repair Organizations Act.
This law states that “Consumer Credit File Rights Under State and Federal Law” must be provided to all consumers before any agreement is made between the consumer and the credit repair organization.
While it may seem like a small thing, this document is an important piece of your credit rights and you deserve to see it, and have it explained to you. If the company isn’t following this document to the letter, they could easily be shut down by the FTC.
Credit repair can take up to a year in some cases before you see significant results. The last thing you want, is your agency of choice to shut down before the job is done.
3. Never Tell You to Create a New Identity
There’s a process called “file segregation” that involves creating a new credit file. Illegitimate companies will call this a fresh start for people, but this is actually an illegal form of credit repair. It could easily cause problems for both the consumer and the credit repair company.
File segregation works by using an EIN (employer identification number) or a social security number to trick the bureaus. The goal is to make them create a new credit report for you without anything attached to it. That way, when you apply for personal loans no credit check or purchases, the fake report shows up instead of the real one.
It’s pitched as an easy way to clean up your credit, but it’s not worth the risks. Not only is this a federal crime, but wiping your credit report will not help your credit score. Having items on your credit report builds credit that you need to establish a score – one of many reasons why credit repair services are needed is because they can help you identify items that will most beneficially impact your score.
That new report of yours could easily get you in jail for mail, wire, or civil fraud. If a company tries to tell you that this is the right way to go, you should run the other direction.
4. Never Promise to Delete Specific Information From Your Report
Whether it’s positive or negative, accurate information cannot be removed from your credit report. The credit repairing service you choose should never offer or guarantee to remove something that you know or believe to be accurate.
In fact, if they promise to delete anything specific from your report, that’s a red flag right there. The removal of the item is totally dependent on the creditor or bureau that placed it there. There are numerous repair tactics, but none of them guarantee results.
In some cases, restoration services can go so far as to sue the companies involved, but at the end of the day there are no promises to be made. The best credit repair will dispute only the information that is inaccurate, misleading, incomplete, ambiguous, biased, or unclear.
Top Credit Providers in 2017 Reviewed
Here at DebtSteps, we take a hard look at all of the top companies that repair credit and thoroughly review them to see which ones are legitimate and successful in helping consumers take back their credit.
Let’s take a look at our top picks:
1. Sky Blue Credit Repair
Sky Blue Credit Repair is one of our top picks because of their simple and fair pricing. They also offer one of the fastest dispute rates in the industry at 15 items every 35 days. Having this many disputes across the three bureaus increases your chances of success!
They also offer plenty of assistance with credit score improvement and even bonus services like goodwill letters and negotiation guidance.
2. Lexington Law
Lexington Law boasts over 7.5 million items removed from client credit reports in 2015. This incredible statistic boosts confidence in their skills from the get-go. They also offer a ton of information on how repairing your credit works and what they can do for you.
The level of transparency and the prior success here are both great reasons to choose this service.
CreditRepair.com is a great choice because of their 24/7 monitoring and the various tools they offer to keep you in the loop. They also have a strong focus on helping you develop positive spending habits and choices so your future is rooted in smart credit decisions.
Start Repairing Your Credit Today
Bad credit scores can be a huge burden, but with the right credit repair service, you can start repairing your credit today and see a boost in your score. Don’t hesitate, start making progress towards better credit today!