A lot of people are looking for professional credit repair services. However, not all companies and agencies that offer credit help are legitimate or can be trusted. This is why it’s important to understand how credit repair companies work so you can avoid being a victim of fraud and rip-offs.
How Do Credit Repair Companies Work
A legitimate credit repair company can give financial counseling and education to people who are in the middle of bad credit. By evaluating the individual’s financial situation, a credit counsellor will be able to give specific advices to help a person recover from bad debt or improve bad credit.
How long does it take to repair bad credit? In reality, repairing bad credit takes time. You may need to work on the improvement of your credit score for at least a year before you can regain a good credit standing. Sometimes, rebuilding credit can take more than a year or a few years, depending on how bad the damage is.
Watch out for credit repair agencies that promise instant fix of your credit score. There is no way any person or agency can remove records of debts, bankruptcy, tax liens or judgments from your credit reports unless the information is incorrect.
If an agency claims that it can fix your bad credit without effort on your part, you are surely dealing with a fraudulent company. If a counselor advices you to change your identity by using an Employer Identification Number in place of your Social Security Number, it is a clear sign that you are dealing with a fraudulent agency. A legitimate and trusted debt relief service would never resort to illegal or deceptive tactics to rebuild bad credit.
Bad Credit Solutions
Some counsellors who work for credit repair agencies earn commissions based on the number of people who sign up for the agency’s Debt Management Program or DMP. Consumers must avoid seeking help from such agencies because the counsellors may be tempted to convince their clients to sign up for a DMP even when other solutions are available.
Before advising a client to get a Debt Consolidation loan, a trusted credit counselor should give practical suggestions on how you can recover from bad credit. For instance, a counselor can help you devise a debt repayment plan that fits your financial capability and situation. You may also be given tips on how you can save more money and stretch your budget to avoid incurring new debts.
It is also your right to look into your credit report. In fact, you don’t need to go to a credit counseling agency to check your personal report. You can order your free annual credit report from www.annualcreditreport.com so you can be sure that all information in your file is accurate. False details and outdated remarks can badly hurt your credit rating.
Keep in mind that it is your right to dispute credit report errors as stated in the Fair Credit Reporting Act. Cleaning up errors in your report can significantly boost your score as you continue to improve your credit history.