When your credit falls out of alignment, and your score start plummeting, it can be a truly disastrous feeling. After all, without good credit there’s very little you can accomplish financially and, in some respects, it also limits your career prospects. Whether it’s a bad mistake you made, a major life change, or something else entirely out of your control, bad credit is a very scary thing.
Thankfully we have credit repair agencies to help out in situations like these. There are countless companies that promise to help you get your score back where you want it, but do they actually work? The answer, like many things involving credit, is complicated.
The Truth About Credit Repair Services
Credit repair is simply the process of leveraging your rights as a consumer, under certain credit laws, to have items removed from your credit report that are unfair, unsubstantiated, or inaccurate. The way credit scores work, items like these can drag down your score for reasons beyond your control.
By participating in fair credit repair practices, you have the right to have items like this removed from your report. In that regard, credit repair is something that works very well. To answer a common question on people’s minds, DIY credit repair is possible, but it can be very difficult without a keen understanding of what is possible to have removed.
If you try to dispute items that are correct, you’re simply wasting precious time that could be spent focusing on more important aspects of your report. Depending on the credit repair agency, they may work directly with your creditors, with the three credit bureaus, or both.
Ideally, it’s best to speak with both for a very simple reason: bureaus all get their information from different sources. While your report from Experian, Equifax, or TransUnion will all be practically identical, they all come from different data furnishers.
As a result, mistakes are bound to happen, but if you don’t point them out, they drag down your credit. Things like late payments can stay on your report for up to 7-years and represent one of the higher causes of credit score drops.
One example is debt collections. While Charge-offs are extremely bad for your score, multiple ones can be even worse. If your debt was written off and sold to multiple collectors, this may show up more than once on your report. As a result, you’ll be getting dinged multiple times for something that should only appear once.
Something like this can be removed through the process of filing a dispute.
How Does Credit Repair Work?
A study done by the Federal Trade Commission found that 1-in-5 consumers have an error on at least one of their credit reports. The bureaus aren’t interested in looking for these problems, but they can be affecting you and your score.
A legitimate credit repair service will start by pulling your report (preferably doing this part themselves) from the three credit bureaus. Once they have your reports in hand, they will have experienced attorneys and paralegals go over them for any discrepancies or items that can be disputed.
They compile the disputes and put together letters they can send to make the issue known to your creditors or to the bureaus themselves. The key here is to also send supporting documentation that makes your claim valid. Credit repair companies will know what to include here, and will make sure it’s present when they send your disputes.
Sometimes the document you need is obvious, but in other situations it isn’t all cut and dry. Credit repair services will know what to send and can help you choose the proper documentation for the best chance of results.
Once the disputes have been sent, the recipients have 30-days to respond, or they are required to remove the item from your report until it can be validated. Credit repair involves repeating this process until all possible items have been removed from your report.
How Long Does it Take to See Results?
Removing negative items from your credit report is among the fastest ways to get your credit score moving in the right direction. That being said, the 30-days response time means that you’ll be waiting for each dispute to receive an answer.
If the verdict is not in your favor, the credit repair company will look for another angle they can use, and submit the dispute again. Depending on the items you’re trying to get removed, the time it takes to see results can be anywhere from a single month, to several.
Furthermore, the specific items that are removed will have varying affects on your score. For example, you’ll see a bigger jump from a late payment removal, than you would from a single inquiry being removed.
As a result of these things, credit repair companies cannot legally promise an exact timeline for when you’ll see results. Instead, it’s better to look at their previous clients and see how people have benefited from their services in the past.
Our various credit repair reviews will help you better understand how you can repair your credit with the help of today’s top companies. In the meantime, let’s look at your rights as a consumer and the laws that protect you from scams.
The 4 Laws That Help You Fix Your Credit
Before you go about fixing your credit, it’s best to understand how and why companies are able to offer credit repair. By citing specific elements of these laws, many credit repair services can ensure that you get the item in question removed.
They can do so, thanks to four key laws:
1. The Fair Credit Reporting Act (FCRA)
Our first act is one of the oldest ones in the book. It is a federal law that sets down rules for how information can be gathered by creditors and bureaus. It was developed by the Federal Trade Commission.
Credit Reporting Agencies (also known as bureaus) gather as much information as they possibly can about your credit. The FCRA forces them to provide you with a free report each year, for the purpose of verifying the accuracy of the information they’ve placed on it.
As part of the FCRA, you have the right to report errors to them and they must remove them if it is incorrect. If they discover later that it’s supposed to be there, they can put it back, but they must give you 5 days notice.
The FCRA also sets the limits for how long you can have negative items on your report. They typically range between 7 and 10 years. If mistakes are brought to their attention, they have 30-days to respond.
2. Fair Credit Billing Act
This is part of the Truth in Lending Act, which protects you from unfair billing and sets the rules for how errors should be corrected. Unfair business practices will be targeted by this law. Things like incorrect statements and amounts, or you were charged for something you didn’t buy are all examples.
To utilize this law, you must send a letter to the creditor within 60-days of the transaction in question. One thing many people don’t know, is that if you submit your claim via a website, you waive your protection under this law. Because of this, make sure you send a physical letter.
3. Truth in Lending Act
This law ensures that you’re given proper disclosure for the terms and costs of a contract. You may see this act referred to as the Consumer Credit Protection Act or “Regulation Z.” As part of this law, creditos have a uniform method for how they calculate finance charges.
As a result, you can focus on finding the lowest possible rate. It doesn’t specify how much a creditor can charge, but it does regulate how they disclose their charges, so they are given to you in a way that’s easy to understand.
This law forces them to calculate an Annual Percentage Rate and disclose it to you, that way you’re not being given misleading interest rates.
4. Fair Debt Collection Practices Act
This final law protects consumers from the behaviors of debt collectors. It doesn’t protect businesses, only individuals. Another aspect of this law allows you to find and obtain the information you need to dispute specific charges on your report.
Ultimately, this law prevents debt collectors from using “abusive and deceptive” behavior when they are trying to collect debt. They cannot call you after 9pm or before 8am for example. They cannot contract you at work, or call you non-stop either.
They cannot talk to anybody else about the dispute like a spouse or attorney. They aren’t allowed to use abusive language or threaten you with things like arrest. Finally, they have to stop contacting you after they receive written notice that you demand them to stop or you refuse to pay the bill.
Credit repair is real, and it really works. In the end, it’s all about understanding your rights as a consumer and applying the correct laws with the help of your representatives at a credit repair agency.
So, stop asking yourself “do credit repair agencies really work” because they do, and they’re here to help you. Check out our reviews today to decide which one is right for you.