What is Credit Restoration
Credit repair companies promise to clean up your credit report and help you rebuild a good score for a fee. While there are legitimate companies that can assist with this, beware of scams. They may pressure you to pay upfront fees, make lofty promises, or fail to explain your rights. Some even encourage you to lie in order to get negative items removed from your report. By law, credit repair companies are only allowed to remove inaccurate information from your credit report. Incorrect account balances, missed payments, inaccurate names, addresses and dates of birth are some of the most common errors that can be fixed with a credit restoration service.
However, accurate negative information like bankruptcies, collection accounts and charge-offs can remain on your credit reports for seven to 10 years. The best way to fix these types of mistakes is to dispute them with the credit bureaus directly. This is a time-consuming process and can be difficult to do on your own, which is why some people choose to hire a Credit Restoration company to handle it for them.
A credit restoration company can help you dispute inaccurate information with the credit reporting agencies (CRAs) and creditors. This is a right afforded to you by the Fair Credit Reporting Act and other consumer protection laws. The CRAs and the creditor are required to investigate your claim within 30 days and to respond with either proof that the incorrect information is valid or evidence that it should not be included in your report.
What is Credit Restoration and is It Ever Legitimate?
Credit restoration companies can also help you establish a budget and manage your debts in order to improve your credit score. But remember, the most important thing you can do to improve your credit is to pay your bills on time and keep your debt utilization low. A good credit score is not achieved by paying off all of your debt, but rather by demonstrating that you are a responsible borrower who will repay financial obligations in a timely manner.
Generally, all that a credit restoration company can do is to work with the CRAs and creditors to dispute incorrect or outdated information on your credit report. However, they can’t do anything that you can’t do yourself for free.
If you are looking for a more hands-on approach to repairing your credit, consider working with a certified financial planner who can take a look at your overall financial picture and develop a plan of action that will improve your credit scores in the long run. However, if you are in need of a quick fix, consider focusing on disputing inaccurate items on your credit report with the CRAs and your creditors instead. Be sure to read our tips for doing this yourself before you start paying a credit restoration company for the privilege. And don’t fall for the trap of those credit repair services that promise a miracle credit score in just a few weeks!
