Credit Repair – Common Errors and How to Choose Repair Service
Large percentage of the Americans have a bad credit (score less than 600) and because of this they take help of credit repair service. But surprising thing is that, most of these bad scores are due to the errors in the credit report resulting in a low credit score.
Typically the errors in credit report are because of:
- Fake accounts opened in your name i.e. the person is a victim of an identity theft
- Missing or insufficient repayment history
- Negative accounts
- High level of debt
Fixing and investing in your credit is very important. Many of these problems can be easily fixed with credit repair. By improving your score you will save thousands of dollars on car financing, mortgages, personal loans, credit cards, business loans and virtually any other credit.
What is Credit Repair?
Credit repair is a professional process that allows people to improve their credit score in the United States, enabling them to access better credit and credit terms. This is achieved through different processes such as correcting the information misreported to the risk agencies, or outdated and unverifiable details.
How Credit Repair Works
Credit repair programs are designed to correct errors and remove negative accounts from your credit record.
This process works by identifying the items that are affecting your credit and disputing those accounts with the 3 largest credit bureaus in the United States – Experian, Equifax and Transunion. By eliminating negative accounts from your credit history you can regain your credit life and continue to fulfill your dreams.
These are the steps that most credit repair programs take to repair your credit:
- Create a free analysis of your credit
- Identify errors and negative accounts on your history
- Create letters and legal documents to dispute these accounts
- Contact credit bureaus and creditors to remove negative accounts
- Counseling to establish payment history through credit cards or loans
- They work with creditors and credit bureaus to find legitimate reasons to remove incorrect, unfair or questionable items from our clients’ credit reports.
Although there are certain strategies that will work and improve your credit almost immediately, the process itself takes an average of 3 months. This process is time-consuming as the credit bureaus ask for detailed documentation of the negative accounts being disputed and take 30 days to respond to any disputes.
That is why it is necessary to have professionals to repair your credit as quickly and for the least cost as possible. This is the reason it is recommended to check your credit history frequently to be aware of changes to your history.
Before Choosing Credit Repair Service
A credit repair program may sound great since they promise to fix your credit, but you should be very careful.
Certain problems in your history can’t be fixed through a credit repair, but there are companies that will promise to fix. So before choosing credit repair service, following points should be kept in mind:
- It is important to choose a service under the regulations of the Credit Repair Organizations Act (CROA) in the United States
- A contract detailing the services they will provide should be in writing.
- They give you the right to cancel within three days without incurring any cost.
- You are given the full cost of the service in writing.
- You cannot be charged until a service is provided.
Other items are not required by law, but it is still important that your credit repair company follows them:
- Free analysis (many companies charge you without knowing if they can help you).
- They stop charging, when they repair your credit (others continue to charge you even though there is nothing left to repair).
Having a GOOD CREDIT can save you a lot of money and help you achieve your financial goals.
This article has been written by Chandra Mehta.
Chandra is a seasoned banker with 35+ years of experience in banking and financial services industry. He’s a retired banker and has served as Chief Manager and Assistant Vice President in State Bank of India/or its subsidiaries. He has authored many articles on this site (allonmoney.com).