People often feel frustrated when they start the journey of repairing their credit. Many will consider a credit repair company to assist them in reaching their goals. This can be a great option, however, there are pitfalls to hiring a credit repair company.
Hiring a credit repair company is not a decision that should be taken lightly. You will want to make sure you are hiring a company that will repair your credit legally and gets the results you are looking for. The questions you will ask will pertain to their reputation and their process for repairing your credit. You will be able to determine if the credit repair company seems too good to be true.
Hiring A Credit Repair Company Can Help
Are you looking forward to securing a personal loan or dreaming of buying your first home? Even if you are applying for a mere credit card, having a poor credit score can significantly reduce your chances of getting any of these.
A good credit score is essential for financial security, investment efforts, saving money, and even making money. If your credit score is pulling you back from doing things you want to do, you must get it fixed.
Rebuilding a credit score by yourself requires a lot of time and theoretical knowledge. This is the primary reason why people prefer hiring a reputable credit repair company instead of putting in all the time and effort themselves.
Credit repair companies will do everything to take care of your financial standing and make you a better applicant in return for a fee.
There are a lot of credit repair companies out there, and some may even rip you off. However, you must know that not all of them are unethical. You can find many good credit repair firms; you just need to know where to look. Here is everything you need to know before hiring a credit repair company
How to verify a credit repair company?
There are a ton of ways to check and verify credit repair businesses. Here’s where you can start.
- Read reviews and feedback on the company at Better Business Bureau website.
- Look through the Consumer Financial Protection Bureau’s complaint database.
- Search additional review sites for helpful user feedback and just Google everything you can about the company before trusting them.
Make sure you avoid companies that seem too good to be true. Here are some things that fake companies promise to lure you in:
- Legally create a new credit score for you that starts from scratch
- Guarantee improvement in your credit score
- Remove accurate negative information from your credit reports
- Ask you to pay in advance for their services
These are some red flags you must look out while searching for good credit repair companies. There is a lot more you must understand about a company before you trust it with your money. Let’s take an in-depth look into all the aspects of a good association:
1. Reputation, Track Record and Experience
There aren’t many literal requirements or steps in becoming a credit repair specialist. There are no classes one must attend, no exams needed to pass, and no school or education whatsoever.
This is why you must choose the right credit repair company with a good reputation and years of experience! When looking up a company’s reputation, start from Google. Look for public reviews, feedback, or any stars that your credit repair firm has.
Then, inquire how long the firm has been in business. A company that has been well-established for over five years may not be the best, but it is something to consider.
A well-established credit repair association knows the nuts and bolts of rebuilding your credit score. You must hire an agency with an excellent track record, reputation, and years of experience under their sleeves!
2. How much do credit repair companies cost?
The amount you need to pay and how it is determined will vary from company to company, but there is one golden rule. Credit repair firms cannot request you or receive payment before they have started working or until they deliver the promised improvements.
Depending on the way various companies work, the payment options may differ. Here are some payment options you may turn up to:
- Pay per delete
- One-time payment
- Monthly payments
Pay per delete: In this case, the credit repair company will charge a fee every time it removes any negative information from your credit report. This may start around $35 per reduction and could range up to $750 or even more.
This arrangement is not always the best, as in some cases, the negative dirt could reappear on your credit score in a few months!
One-time, flat fee: The credit repair company will ask for a one-time payment at the end when it has delivered the promised results.
Monthly payments: Here, the credit repair company will charge you month by month, ranging anywhere from $50 to $150 or more. You might also be asked to pay setup fees or a fee for accessing your credit score and reports.
When opting for a monthly fee arrangement, you should ask how long the process will take and how much you should expect to pay for it. If the company estimates longer than six months, you should reconsider looking for another firm.
Before hiring a credit repair company, think about how much work your reports need. If there are only two or three negative items, you’ll be better off fixing those yourself by paying down debt and disputing the errors on your reports.
3. How long does credit repair take?
Logically, credit repair firms can neither guarantee a specific result nor can they offer you the exact timeline required to fix a credit report. However, an experienced company would know how long it generally takes to start seeing good results!
Some credit repair companies deliver promised results within months, and some guarantee even much faster results. It would be best to inquire about the delivery times, which must fit your needs and urgency.
Remember, the credit bureau usually has 30 to 45 days after receiving your dispute to respond to any correspondence. So, you should be suspicious if a credit repair company offers an unusually short turnaround time.
Therefore, even under a well-rehearsed timeline, your credit repair process is bound to take at least two months. On the other hand, if you’re dealing with intense negative items like foreclosures or auto possessions, or if you have over five negative accounts to deal with, your credit repair can take as much as 8 to 9 months!
Keep in mind how bad your credit report is, and then ask how long it will take to get fixed. If the credit repair company offers a realistic timeline and a reasonable fee, go for it!
4. Legalities
While making your decision to hire a credit repair firm, make sure they comply with all legal requirements. The company you’re planning to hire must be fully operating under Federal and state laws.
In many states, these companies register and obtain a bond that effectively protects clients from any possible misconduct cases during the engagement. Again, different states have separate licensing and bonding regulations, so you must research properly to determine specific laws governing credit repair companies in your state before hiring a company.
As long as your chosen company has a strong reputation and adheres to licensing and bonding requirements, you’re good to go. After all, you won’t visit a doctor who isn’t permitted by your state.
Here are some of the rules and regulations that credit repair companies are expected to follow:
- They cannot make false statements about your credit scores or how much they guarantee to improve them.
- They can’t make misleading or fabricated claims about the services they offer.
- Companies can also not alter your identity in an attempt to hide negative items from your credit report.
- They can not ask for you to pay in advance and must fully perform services they owe you.
There are many such laws and regulations that a credit repair company must work under. You should perform in-depth research on your rights before hiring a credit repair firm.
5. Ask for references before you hire a credit repair company
References are customers who have worked with that particular credit repair company in the past. You can simply request references from your preferred firm to check how reliable and qualified they are.
If a company refuses to do so (claiming that it is confidential information), you should refer to a legal counsel or attorney who can vouch for the firm’s legitimacy.
Summary
As a customer, you should be extra attentive while looking for credit repair companies to work with. Since there are a ton of credit repair firms, make sure you can differentiate between a legitimate one from fraud or scam.
Follow the five steps mentioned above, keep those in mind, and you will not fall into a fraudulent trap. Let me revise the things you need to keep in mind before hiring a credit repair company:
- They must have a good reputation and long-term experience in the business.
- Credit repair companies must not ask for advance payment or fees.
- They must not be too good to be true. Avoid companies that guarantee to delete accurate negative items. Avoid companies that promise to fix your score within a month.
- They must help you understand your legal rights and be open about their working process. In other words, avoid companies that hide details and essential information from you.
- They must work under Federal and state laws.
If the company you find follows all these points, you can move on to work with them. Make sure you put all these factors into consideration before hiring a credit repair company.
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