How To Choose A Credit Repair Service

2019/02/25

If you are considering signing up for certain credit repair services, you must keep an array of things in mind. First of all, it is very important for you to understand that you do not necessarily have to hire a third party agency to repair your credit; if you know the basics, you can go ahead and do it on your own.

However, if you must hire an agency to fix your credit, you must first do a thorough background check about them to confirm whether they are legitimate ones and offer ethical services.

Membership With The ECRA

ECRA stands for Ethical Credit Repair Alliance. Legitimate credit repair services must be a member of the ECRA. Besides that, they must be duly registered with the Better Business Bureau as well.

Correct Negative Entries Cannot Be Removed Legally

Many agencies make highly lucrative claims just to attract more clients. But, it is very important for you to understand that if an offer sounds too good to be true, the chances are that it really is. For example, if a credit repair company claims that they have ‘connections’ with the credit bureaus and that they have highly specialized financial experts who can remove all negative entries from your credit report, including the ones that are correct.

No matter whatever the company does in defending their claim, it is important to note that such things are not possible legally. Correct negative entries cannot be removed. For example, bankruptcies stay on credit report for a period of at least seven to ten years. There is no way to remove the entries regarding bankruptcy until that period expires. So, beware of agencies that make such false claims.

Avoid Agencies That Claim To Create A ‘New Identity’ For You

Always remember, there is no legal way to create a ‘new identity’ for you. Therefore, if you come across certain credit repair services that claim to create a fresh credit history for you, you should treat it as a warning sign. Such agencies are undoubtedly illegitimate ones because they are promising you something that cannot be done legally.

The reason why many consumers still fall prey to such false promises is mainly because they are ignorant about how credit repair works. Besides that, such claims look like a magic solution. But, it is important for you to understand that your credit report includes your SSN and it records all your credit history right from your adulthood when you started your own financial life until the present.

How can any agency wipe up all this information and prepare a fresh credit report for you with no entries on it? They will have to use some illegal techniques to do this, such as by using a false SSN or by using any other file segregation technique. So, do not fall prey to such magic solutions.

Never Pay The Fee In Advance

Unscrupulous companies will always make attractive promises and will ask you to pay the fee for the credit repair services in advance. As per the US laws, it is legally mandatory for all credit repair organizations to deliver their promises first and then charge their fee. Therefore, you must not pay their fee upfront.

Written Contract

There must always be a written contract that should explain the types of services that will be provided to you and the amount of fees that you will have to pay after completion of those services. If there is no written contract in place, you should never pay a single penny. No matter how lucrative claims a credit repair firm makes, you should never trust a verbal agreement.

The agreement must always be in writing. It is also important for you to keep in mind that you have the right to cancel the contract within three business days if you change your mind. Read the terms and conditions mentioned in the contract thoroughly to make sure everything has been explained clearly in it.

Changes In Credit Reports Do Not Happen Overnight

Many credit repair services offer quick fixes, where they promise to repair everything within 24 hours. It is very important for you to keep in mind that there is a set procedure that must be followed to dispute incorrect entries on your report and get the same rectified; this procedure usually takes at least 30 days.

Likewise, it also takes some time to add positive entries, such as about new debt payments; you first make the payments to the creditors and the creditors then send the details to the credit bureaus and then the credit bureaus make relevant entries on your credit report accordingly.

Disputing All Negative Entries On Your Credit Report Is Not A Wise Thing To Do

A very common technique to improve one’s credit score is by disputing all the negative entries on the credit report. When you file a dispute with the credit bureaus regarding certain entries, those entries are temporarily removed from your report, which results in an instant increase in your credit score.

The credit bureaus investigate your claim; if they find that your claims are genuine, they will keep those entries removed, but if your claims are found to be false, all those negative entries will again start reflecting on your report. Unscrupulous credit repair services dispute all the negative entries, including the ones that are correct, and when those entries are removed temporarily, they show you the instant increase in your credit score and demand payments from you.

Many consumers fail to realize the actual truth and they fall prey to such unfair techniques. You are also recommended to avoid all those companies that ensure guaranteed results even before they review your credit report. It obviously does not make any sense to believe in such highly lucrative promises that are made on thin air.

Companies offering genuine credit repair services will first review your finances and credit report thoroughly and then they will educate you on where the actual problem is and what can be done legally to improve your credit situation. Even then, they will avoid giving you any guarantee because repairing credit depends on a wide array of factors, such as how efficiently you follow their advice.

Photo Credit: Minedocumentary.org

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