Credit repair online involves disputing inaccurate negative information on your credit reports. If done correctly, this process can boost your credit scores. However, it’s important to know the limits of these services and how much they can improve your scores.
Inaccurate and outdated negative information can hurt your credit scores. These errors can include missed payments that the credit bureaus don’t recognize, incorrect “purge-from” dates for old debts, and even duplicate negative items. The best credit repair companies focus on getting these items removed from your report.
A reputable credit repair company will start with an initial consultation and review your credit reports from all three credit bureaus. They will then identify the most common errors and devise a strategy for disputing them. This can include requesting that the credit bureaus contact the creditor or debt collector to verify the accuracy of the data, as well as asking the creditor to remove the item from your report. You will be able to track progress through your account dashboard and receive real-time notifications.
Some credit repair companies also recommend applying for new credit to add positive information to your reports. However, this can actually harm your credit score by triggering a hard inquiry on your report and decreasing your average account age. You should only apply for credit when necessary.
Before standardized credit reporting began in 1970, local agencies kept profiles on consumers that included borrowing and payment habits. This information was used by local banks during underwriting. Once this system was adopted, credit bureaus started collecting and distributing credit reports to help lenders determine whether or not to approve applicants for loans. Errors on these reports can impact a person’s ability to obtain a loan or credit card, and the repercussions can be far-reaching. The Fair Credit Reporting Act established that you have the right to request a free copy of your report from each of the three major credit bureaus. You can also download your own reports for free at annualcreditreport.com.
Many credit repair companies claim to have a faster, more efficient method of disputing errors on your report. But in reality, this is not always the case. The process itself takes about 90 days, and there’s no reason to pay extra for a service that can’t do more than what you can do on your own.
If you’re thinking about working with a credit repair agency, read reviews of the company and their processes on consumer review sites such as Yelp and the Better Business Bureau. Look for warnings such as companies that demand upfront fees or promises of results that sound too good to be true. The CFPB’s website provides more tips on how to avoid credit repair scams.
A good credit repair agency will be honest about the time frame, costs and likelihood of success. They should also be able to explain any guarantees that they offer. They should also comply with the CROA by providing a contract that clearly states what services they will perform, how long it will take for them to get results and how much it will cost for those services. In addition, you have the right to cancel your contract within three days without charge if it doesn’t meet your expectations.