When you're having difficulty getting credit cards, loans or apartments because of a poor credit score, it can seem like a no-brainer to sign up with a credit fixing company. These companies typically charge a monthly fee to help you get negative information removed from your report. However, many of these agencies are scams and should be avoided at all costs. Some are even violating consumer protection laws. The CFPB recommends consumers do their homework before selecting a company to work with.
In general, credit repair services can be divided into two categories: those that offer a monthly subscription fee and those that charge per correction. The former usually includes a monthly credit report and score analysis, as well as a set number of bureau disputes and creditor interventions. Some also offer personal finance tools, like credit score trackers and budgeting software.
A good credit repair service will do a thorough review of your credit report from each of the three major credit bureaus, Experian, Equifax and TransUnion. It should find any inaccuracies and then communicate with the credit bureaus and creditors to have them corrected. Some credit repair companies may also help you with negotiating with lenders to remove collection accounts or reduce the amount of debt you owe.
When choosing a credit repair agency, look for one that offers a free consultation and has a money-back guarantee if it doesn't perform as promised. It's also a good idea to choose an agency that's a member of the Credit Repair Organizations Act (CROA). CROA requires credit repair companies to inform you of your legal rights, give you three days to cancel and clearly spell out the fees for their services upfront.
Choosing the right credit repair agency isn't easy. You'll need to research different options, read online consumer reviews and compare fees and services offered by each. If you're looking for a full-service credit repair agency, The Credit People is an excellent option that has been around for 12 years and offers a variety of perks, including credit monitoring.
The Credit Pros is another great choice for those who want to get their credit fixed quickly and easily. Its fee structure is a little more complex than other credit repair agencies, but it's worth the extra effort because it guarantees to dispute at least one error on your credit report every month.
While many credit repair agencies make big promises and claims, it's important to understand that a credit repair company can only work to remove inaccurate information from your reports. They can't remove legitimate negative information or promise to raise your credit score. In fact, if you see any credit repair company making these types of claims, that's a red flag.
It's also a bad idea to choose a credit repair company that charges you upfront before performing any services. This violates the CRA and could land you in legal trouble. The CFPB recommends that you only pay for a credit repair service when it has performed its obligations and you've received the results you were promised.
