Good credit plays a vital part in getting the money you need to make major purchases, whether you are buying a new home, a new car or securing a credit card. But for many Americans, past trouble in paying off debt or mistakes by credit reporting agencies can lead to lower credit scores, which ultimately limits your ability to secure credit.
If you are one of millions of Americans who have negative events on their credit reports, one option to improve your credit score is to work with credit repair services. These companies may make bold promises such as, "We can erase your bad credit 100% guaranteed," or "We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"
Don't believe them. In most cases, these empty promises are sure signs of a scam.
However, in the case of fraud, identity theft and simple mistakes by companies reporting your credit records, you do have safe and legal options for bad credit repair. Here are the top things you need to know before you reach out to one of our best bad credit repair companies.
Time and Debt Repayment is the Best Method to Repair Your Credit History
In cases in which a negative report on your credit record is accurate, the best tool in your credit repair arsenal is to build a personal debt repayment plan and stick to it. Negative incidents stay on your report for seven years, and bankruptcies remain for ten years. The timing on these events begins to run out the moment the incident hits your report, so keeping your credit issues in check is always the best medicine.
If you need credit counseling, there are organizations that can help you. The National Federation for Credit Counselors is the nation's largest financial counseling organization, and its Member Agency Network includes more than 700 community-based offices located in all 50 states and Puerto Rico. These agencies provide financial counseling and education to millions of consumers each year in person, over the phone or online.
A credit repair service can help you in cases of fraud or misinformation, but make sure you know without a doubt that the item is disputable before you begin the process (and the investment) of engaging in bad credit repair.
If It Sounds Too Good to Be True, It Is
Thousands of people are scammed every year, and the Federal Trade Commission (FTC) is explicit in the protection it provides you when dealing with credit repair companies.
The Credit Repair Organizations Act (CROA) was signed into law to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. Under the law, credit repair companies must provide a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign any contract.
They are also required to give you a written contract that explicitly spells out your rights and obligations.
A credit repair company cannot:
- Make false claims about its services.
- Charge you until it has completed the promised services.
- Perform any services until it has your signature on a written contract and has completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Your signed contract must include:
- The payment terms for services, including the total cost.
- A detailed description of the services to be performed.
- How long it will take to achieve the results.
- Any guarantees the company offers.
- The company's name and business address.
Do Your Homework
There are many listings and reviews out there that display the best bad credit repair companies. Our own list is very comprehensive and provides details on the companies we deem the most competent and legitimate. But beyond understanding the basic features of a service, the level of support it provides and how easy to use its services are, consider whether you really need to use the service.
You are entitled to one free credit report per year from each of the three major credit reporting agencies. Monitor your credit report and remain as diligent about your credit score as the companies who grant credit do.
If you suspect that there are inaccuracies or fraudulent information on your report, see what you can do to investigate it yourself. You can ask for a full investigation free of charge of inaccurate or incomplete credit information. Anything a credit repair service can do, you can do for yourself at little or no cost. The FTC has a wealth of information about process to follow and how to inquire about inaccuracies or fraud.
The truth is, credit repair services do offer a service that can help repair your credit score. But you can save yourself money and frustration by getting all the information in front of you. The more informed you are, the smoother your investigation will go with or without a credit repair service.
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