There are ads for credit repair nearly everywhere today. You may see cards left in businesses, ads stapled to telephone poles and online companies offering their services. Sorting the few legitimate ones from the mediocre services and scam attempts can be a major task. A good solution is to know what to look for in a reputable company.
Look At The Repair Time Estimate
If a company is offering overnight results, turn and run the other way. Legitimate credit repair takes time. Many companies can help you raise your score, settle debts and remove negative items faster than you could on your own. However, no company has an immediate magic fix. Look for reasonable time estimates such as 30 to 40 points in a few months and a slower climb after that. Each situation is different, and improvement numbers can vary considerably.
Ask About The Plan
A company should not just take your money and leave you wondering what they are doing. Forbes points out the importance of working with a company that helps you help yourself as well. For example, the credit repair company should urge you to pay down your credit card debt, make a budget, cut unnecessary expenses and do as much as possible on your own while they work on removing negative items and negotiating settlements.
Learn The Signs Of A Scam
The Federal Trade Commission provides a list of ways to identify a scam. These are some of the most important signs to look for:
- The company makes you pay before they complete any work for you.
- The company tells you to avoid contacting credit reporting agencies.
- The company fails to explain your legal rights before you sign a contract.
- The company tells you to provide false data when applying for loans or credit.
- The company tells you to dispute inaccurate and accurate information on your credit report.
Another common scam explained by the North Carolina Department of Justice is inventing a new credit report. To do this, the credit repair agency will tell you to create an employer identification number or EIN. They instruct you to use that instead of your Social Security number.
Read Online Reviews
Look at third-party sites that are not biased. Review at least five or six different sites, and avoid reading the reviews posted on the company’s main site. These are often fake. You can also check the Better Business Bureau’s site to see if there are any adverse actions against the company. Look at Consumer Reports and other similar sites to see if there are complaints. Every company will have some complaints. However, the positive reviews should outnumber the negative ones.
Decide If The Cost Is Worth It
If you have a lot of complicated debt and collections, it may be worthwhile to hire a credit repair company. However, if you only have a few old collections or a few inaccurate items that are easy to disprove on your report, you can easily handle these tasks yourself. The Federal Trade Commission suggests reporting inaccuracies with supporting proof to the reporting bureaus that listed them.
The FTC also warns people to use careful consideration before filing for bankruptcy. Also, you can try to settle some debts on your own. If there is an old collections account, the creditor may agree to let you pay a fraction of it. When doing this, ask the creditor to agree in writing via fax to list the debt as “paid as agreed” after the settlement. Do this in advance. If creditors are not willing to budge and the debts are too much to manage, a reputable credit repair company may be able to help. You may also consider free credit counseling for advice before hiring a credit repair company.
You can also ask someone trustworthy for a recommendation. An insurance agent, an attorney, a financial adviser or a similar professional may have some good credit repair service recommendations. However, you should still do your own research on these entities before you hire them even if they were highly recommended. To report credit repair fraud, call 1-877-FTC-HELP.