The Pros and Cons of Credit Repair Services

06
August

Bad credit is no joke. A low credit score makes it difficult to get reasonable loan rates or to even get approved for a loan at all. Even just a modest increase in your credit score can mean lower interest rates, and that can equal significant savings in both monthly payments as well as interest paid over the life of the loan. There is no question that many Americans could benefit from an improved credit rating, but is it necessary to hire a credit repair company to accomplish this, or can you do it yourself?

Your credit history is what it is. Nobody, not even a credit repair company, can rewrite your credit history. At least not legally. What a credit repair service can do, though, is help root out and clean up inaccurate and out-of-date information in your credit report. There are no fees to correct information like this yourself, but even simple fixes like this can consume several hours of your time.

Credit repair services will do these things for you. They will obtain copies of your credit report, examine it for errors and inaccuracies, and send out letters of dispute with the necessary documentation. In short, they will save you time. There are, however, no secret remedies. It just takes time, persistence and patience to fix these problems. Hiring a credit repair company is largely about paying for the convenience of not having to deal with this situation yourself.

So what are some of the reasons, other than saving time, that you might consider a credit repair service?
• They’re the professionals, and you’re not. Credit repair services do this kind of thing all the time. It’s how they make their living. They have more experience, more resources and more knowledge about the credit repair process.
• Credit repair services work directly with your creditors. Everybody’s situation is unique, and credit repair services will use their knowledge and expertise to work through your situation with creditors and figure out the best solution for you.
• A credit repair service can provide budget help. Especially if you have bad credit, you got into this situation at least in part because of poor choices regarding your money. A credit repair service can help you create a budget that will allow you to manage your money better.
• Credit repair companies can help you stay on track. Once your credit is repaired and you’re out of debt, the last thing you want is to fall right back into the same hole you just dug yourself out of. Credit repair services can provide budget help after you’re out of debt to keep you out of debt. That is as long as you’re willing to listen to and follow their advice.

While there are some arguments in favor of hiring the pros to help you repair your credit, there are some valid reasons to opt for doing it yourself as well.
• When you hire a credit repair service, they’re in control. You are agreeing to give up some control over your own financial life. You are obligated to do what they say as far as how you spend your money, whether or not you take out any new loans, and even whether or not you need to take on a second job to boost your income.
• Hiring a credit repair company will cost you money. Period.
• No matter what some companies say, bad credit can’t be erased. Repairing your credit will take time.
• Signing on to use a credit repair service means giving up some of your consumer rights under the Fair Credit Reporting Act.

There is big money to be made in the credit repair industry. There are plenty of legitimate companies out there, but there are also plenty of scams, too. If you decide to use a credit repair service, watch out for some of these scams:
• Negative information can’t be erased if it’s accurate. Only inaccurate information can be fixed.
• Credit repair companies can’t legally ask for money up front. By law, they may only ask you to pay them once they’ve fulfilled their obligations to you.
• Watch out for email solicitations. Unsolicited emails are a sign of a shady operation.
• Beware of any company that recommends getting you a new tax identification or social security number. This practice is illegal and doesn’t work.

Whether you choose to hire someone or go it alone, there is help and advice available to assist you. One resource that can help is your local Consumer Credit Counseling Service. You can find them online at www.nfcc.org.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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