There are many people who do not want to take the time to repair their credit. They are either intimidated by the process or they have such busy lives they do not want to make time to do it themselves. They will venture out and hire someone to do it for them but is that always the best use of their funds and time?
We need to bring clarity to the credit reporting system so consumers know exactly what they need to do to dispute their inaccurate credit reports. Hiring a credit repair company is completely unnecessary. People still use them to repair any credit errors because they are intimidated by the process and what happens once they find an error. The process is not as complicated as many think it is.
If you are ready to hire a credit repair company, we have vetted the top firms but our goal is to show you a compelling argument for you to repair your credit yourself. Our number one pic was Credit Saint for their fair and transparent pricing and process.
1. The credit repair process is not difficult.
Years ago you had to write letters to the three reporting bureaus and wait. Then write some more letters, submit documentation, then wait. The process was a little time consuming and daunting. Especially before computers. That is no longer the case.
You will have to verify who you are and the accounts that you have. This one was tough for me. As a real estate investor, I have had several mortgages over the years. I had to have my information there when I signed up to view my reports.
Unless you have not been able to verify your identity and have been blocked from obtaining your credit information online the process is not really that difficult. It is just a matter of point and click with dropdowns.
2. Is hiring a credit repair company money well spent?
Many of the affordable and legitimate credit repair sites out there are actually reasonably priced in relation to the thousands you will save on points and interest.
However, if you have outstanding debts and you are not paying them so you can hire someone to fix their credit, you might be missing the point. Just by paying off your debt, you will naturally raise your credit score.
If you do not have outstanding debts that need to be paid then putting a larger deposit on a secured credit card will also help you raise your score.
Not only will it show creditors you are able to handle higher credit limits but it will also affect your credit utilization – your balance vs your credit limit. If you only have a $200 limit you really should not be putting more than $60 on your balance. It will affect your score negatively. But if you have a $500 limit you can spend up to $150 per month without going over the 30% rule.
Credit repair and restoration is a long game. Changing the habits that may have caused the issue is important.
3. Removing accurate information is difficult.
Many people hire a credit repair company even though the negative information on their credit report is accurate in hopes it will be removed. And in their defense, this has worked for some in the past. Basically, some credit repair companies will challenge legitimate debts. If the creditor does not respond in 30 days then it has to be removed. However, it is not the norm. The creditor will report the debt again and it ends up right back on your credit report the next month.
The integrity of the credit reporting system depends on the information being accurate. Creditors have an obligation to manage these disputes and they do take their reporting seriously.
4. Removing bad credit from your report can actually hurt your score.
I have personally seen this myself. A client will come in after trying to repair their credit. They will have successfully removed a negative item only to have their score drop even further. Why? Just because you had some late payments does not mean all of the information was bad. If you had a lengthy history or made some payments on time, that was feeding into your score. I have seen people get all kinds of things removed only to become credit invisible.
5. You can pay past due accounts instead of a repair company.
Taking the money that you would spend on hiring a credit repair company can be spent paying back debts that are causing the issue to begin with. Since 35% of your score is determined by payment history, rectifying late or defaulted payments is a great way to start repairing your credit. For the future making payments on time will help to rectify your score. You will want to make it a habit to pay your payments on time.
6. You can get your credit reports for free.
Many people will use a credit repair company to get a free credit report. In reality, you can do that on your own. A lot of consumers are confused about how to obtain their credit report. In addition, consumers struggle with making repairs to their credit report. You have the right to get your free credit report every year so there is no point in going through a credit repair company to do so. Many of them will use this as a way to get you in the door.
7. Negotiate collections and charge-offs on your own.
You can typically negotiate the past due collections and charge offs that you have directly with the original creditor or a collection company. Statistically, as time goes on the collection companies know the likelihood of that collection getting paid is slim to none. So the longer the debt was the less you may be able to settle it for.
If the account had a decent credit history before the trouble began it may benefit you to pay it off. If you are purchasing a home the bank will most likely want it paid before they lend you money. In your negotiations, you can also request that the late payments or the account be completely removed from your credit report.
The best thing to do is call and find out what they are willing to settle it for. You can always make a counteroffer for less if you can not afford to pay it all. You can also try to negotiate the removal of the negative information in exchange for the collection to be paid.
8. Learn what a “Goodwill Letter” is and write them.
Often times if a debt is old and you can contact the creditor with a letter asking for the debt or late payment history to be removed. You may have had a hardship that was unexpected. In your letter, you will explain the circumstances. The goal is that the creditor is willing to help you by removing the negative information. It happens more than you think.
In your goodwill letter you will want to mention how you are back on track and showing on time payments. You will also want to give some details on how this happened, like you lost your job or an illness occured, causing you to get behind.
The key with goodwill letters is persistence and follow up. You can also call in an effort to get someone to listen to your story.
9. You can ask the creditor to validate the debt on your credit report.
Under the law, the burden of proof is on the creditor to validate a debt. This basically means that the creditor will have to prove that the debt, the amount owed and other basic information is actually yours and not someone else’s debt. When validating the debt they should provide some type of documentation, whether it is a contract or application that has your signature on it.
At a minimum, the need to verify the exact information you owe and if you have alternate documentation that disputes that information, then you can get it removed.
If the creditor can not provide this information the credit reporting bureaus will have no choice to remove the debt from your credit report. This is especially important when dealing with a debt collector. Debts can be sold over and over again to different collection agencies as they age. The information that is sold can be changed or misinterpreted.
10. It is important to understand the credit reporting system and how it works.
Even if you decide to hire a credit repair company, you will want to educate yourself on the credit reporting laws that govern our system. I totally get why people want to outsource this chore. However, it should never be because you do not know how things work.
There are some really great credit repair companies that can help you and they should always be educating you on how the system works and any new information that is coming out. Credit laws are constantly changing and being updated to protect consumers.
If money is tight, consider using our resources to repair your credit yourself rather than handing over your hard-earned cash. That money could be used to pay off past debts or obtain a secured credit card!
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