What You Need to Know About Your Credit Repair Company

Written by  //  February 20, 2013  //  Consumer Financing  //  Comments Off

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Scores of companies want your business, enterprises that have been established to help consumers fix their credit. Such credit assistance companies can be beneficial for consumers that do not have the knowledge or time to manage their personal credit problems. However, before you choose a credit repair company, you should find out what services are offered and what results are promised. Some companies over promise and under deliver, making such consumer agreements a tenuous one at best.

Credit History

If you fall behind on your consumer debt including car loans and mortgage payments, begin to pay your bills late or wrack up big charges on your credit cards, then you will see your credit score drop. It is not too difficult to see your once stellar credit fall into the pit, but it can be difficult to pull oneself back out of it again. If your credit history is spotty, you will find it more difficult to obtain new credit and at favorable interest rates. Truly, you could end up paying hundreds of dollars more each year in interest charges simply for having bad credit.

Credit repair does not come immediately and it follows much hard work on part of the consumer. Working with a credit repair professional can help you succeed here, although their assistance should be taken mostly as guidance. The hard work is in your hands and you must execute your plan with care to achieve the intended results.

Credit Repair

The following are the key services offered by legitimate credit repair enterprises:

Financial advice — You may be required to pay a fee or make a monthly payment for the services of a credit repair specialist. Some of the work that they do, including obtaining credit reports and credit scores you can do yourself. By visiting AnnualCreditReport.com, you can obtain free copies of your credit report once annually. Pay the small fee to obtain your credit score and then sit down with your credit repair advisor to discuss your information. Your advisor may provide sample letters that you can write to the credit reporting bureaus and to your lenders.

Your money — Beware that some credit repair companies may want you to pay up front for their service. Avoid these operators as the legitimate companies will generally offer you a free month of services to give them a try. Regular payments should only follow the signing of an agreement, but watch out for any contract that binds you to long term services. You should be able to walk away at any time if you are not satisfied, completing your month’s obligation and making that payment if due.

Identity problems — Fraudulent credit repair practices do exist although in recent years the Federal Trade Commission and state attorney generals have attempted to eradicate problems businesses. Still, you should familiarize yourself with some of the terms used. One such term is “reinvent” and that word can be problematic. For instance, if a credit repair company says that you should create a new employer identification number to avoid paying your debt, you are opening yourself up to possible legal action. Debt cannot be magically disposed of — it must be handled with care otherwise your credit history can be ruined and legal action might be taken against you.

Legitimate Companies

Not all credit repair companies want to harm you, with many designed to help you return to the road of good credit practices. If a “quick fix” is promised and a sudden dismissal of thousands of dollars in debt is proclaimed, avoid such businesses. You will only open yourself up to further harm, quite possibly ruining both your good name and your credit.

See AlsoYou Can Find a Credit Repair Counselor

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About the Author

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".

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