Are You Choosing The Right Credit Company?
People having a bad credit record turn to the best credit repair companies for help. You already have a bad score. Your applications for loans or credit cards are not being approved. Your financial stability is derailed. So, when you are in this situation and you are going to pay for credit repair services, you want to work with a company that can deliver great results. You don’t want to be a victim of a scam or fraud when you are spending a few hundred dollars. So, it is important to work with a legitimate credit company that can improve your credit score without any illegal means.
What Can A Credit Repair Company Do For You?
To choose one of the best credit repair companies, you have to be aware of the following:
- The Credit Repair Organizations Act
- How Does Credit Repair Work?
How Does Credit Repair Work?
Your credit report tells a lot about how you have managed your debts and credit cards. Credit card or loan payments, bankruptcies, soft and hard credit inquiries and some sort of positive and negative information goes on your credit score. Based on the information in your credit report, your credit score is calculated. Following are the factors contributing to your credit score and their respective share:
- Payment history: 35%
- Amount you owe: 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit opened: 10%
Your credit score drops when you have negative information in your credit report such as late payments, hard inquiries, bankruptcies, and more.
Sometimes, this negative information is accurate and sometimes it is not. A credit repair company can increase your credit score by removing errors and inaccurate negative information from your credit report. However, it is not possible to remove any sort of negative information that is accurate.
As it is the credit report that shows both positive and negative information, the process of credit repair starts with getting a copy of your credit report. This copy is reviewed to find errors, spelling mistakes, inaccurate information and negative information that should have been removed.
Once the credit report is reviewed, the company writes to the credit bureaus to dispute this information and get it removed. In most of the cases, credit bureaus investigate and make corrections within 30 days. However, there are some cases in which it might take more than 30 days.
Filing a dispute, this is something you too can do. However, a credit repair company can do a little more than that. For example, the company can approach parties that have reported late payments and persuade them to write to the credit bureaus. The reporting parties can direct the bureaus to remove late payments.
The Credit Repair Organizations Act
The Credit Repair Organizations Act protects you from scams and fraud. A legitimate credit repair company always follows this law and provides you with complete and accurate information about its services. The act was passed in 1996 in response to the increasing number of complaints about credit repair companies making false promises. These companies used to promise to offer services that were prohibited by law. This law provides the following protections to the consumers:
- No credit repair company can misrepresent its services.
- It requires a credit repair company to provide its consumers with a written contract.
- The consumer has three days to cancel the contract.
- The company cannot charge before providing its services.
So, it is easy to find a credit repair company that offers legitimate credit repair services. The company will sign a contract and explain your rights. It will never promise to create a new legal identity or remove negative information that is accurate.