Are you one of those people who think that a bad credit score isn’t a huge problem? Experts at the best credit repair services say that most people suffer from such a mindset. They learn how wrong they were only when they have to face the repercussions of the poor score.
“No man’s credit is as good as his money.”
― John Dewey
You may have sufficient funds in the bank but if your credit score is not up to the mark you may face issues in getting loans. Once you are saddled with a poor score, then the only option is to get assistance from trustworthy credit repair services. So, will it be fair to say that there is a connection between hiring top credit repair companies and your financial stability?
Let’s dive in deeper to find the answer to this question.
Let’s start from the beginning by knowing…
What Is Credit Score And Why Is It Important?
Your credit score is a number that lets a lending institution get a fair idea of your creditworthiness. The score is determined on the basis of your credit history. The range of the score is usually between 300 to 850. The best credit repair services recommend that you must try to achieve a figure in excess of 700.
This score is based on the information provided by the three main credit reporting agencies, about the specific individual.
Credit repair services say that if this three-digit number is near the higher range, then you have a better chance of getting the desired loan. Moreover, the lending organization may offer you the loan at favorable terms and conditions.
Credit Score And Credit Ratings Are Two Different Things
Don’t make the mistake of using credit score and credit ratings interchangeably. Credit ratings include letter-grades and are used for evaluating businesses. On the other hand, the credit score, that we discussed above is in numeric form. The best credit repair services are hired by individuals when they suffer from poor scores.
Now you know the definition of the credit score and must be wondering…
Why is it so Important?
Your credit score does more than only improve your chances of getting a loan. It can also help you in getting a favorable interest rate for the loan. Consider a couple of examples of people with bad credit scores. These individuals didn’t hire credit repair services and went ahead with applying for loans.
Andrew and Julia, both separately take a home equity loan for a 15-year duration. Since Julia had a better score, she pays about $22,000 less than Andrew.
Here’s one more example of a poor score causing a borrower to pay more.
Natalie doesn’t have a good score and is advised by her friends to get help from the best credit repair services. She doesn’t heed and goes ahead to take a 5-year auto loan. She later realizes that she paid nearly $5000 more while repaying the loan due to her bad score.
You must be thinking…
What are the other things a Credit Score can Help me with?
Credit repair services experts say that the magic number can also help in lowering your insurance premiums. It is not only banks and financial institutions that rely on these figures. Even your landlord can check your score to know whether you are a good risk or not. Other companies such as mobile phone service providers also use it to determine the deposit amount to be charged from a subscriber.
It must be clear to you how credit scores work.
Some of you must now be thinking that if someone has a bad score, then how do repair companies raise it?
It’s time to know…
How Do The Best Credit Repair Services Work?
The exact working plan of each company may differ but all of them use the following three-step process:
1. Download Your Reports
A credit repair services company will first download your credit reports. There are three main credit bureaus namely, Equifax, Experian, and TransUnion. These agencies keep track of your financial activities to prepare a report for your credit status.
The best credit repair services get their clients’ reports from these bureaus and also from any other relevant sources. The Fair Credit Reporting Act stipulates that you can download your reports without paying any fees, one time every year.
2. Review Your Reports
Once they have accessed your reports, the credit repair services will start reviewing them. They have teams of experts who scan the documents for errors. These inconsistencies can range from wrong personal information to incorrect data/ balance entries.
The best credit repair services ask their experts to look for such mistakes that have caused the problem.
A word of advice
“If you don’t take good care of your credit, then your credit won’t take good care of you.”
― Tyler Gregory
This is the reason why it’s important to cultivate good financial habits. Make it a point to:
- Pay bills on time
- Update any change in your personal information with banks and other institutions
- Pay complete balances
- Do not spend more than 30% over your credit card’s limit
3. Start Damage Control
After identifying the reasons behind the problem, credit repair services enter the damage control mode. They collect evidence to prove that the information in the reports is not correct. The experts look for strong evidence that cannot be disputed.
Once they have collected sufficient material, they will send it to the bureaus for rectification. The best credit repair services file an application for correction only after ensuring that the evidence is strong and irrefutable.
“If repairing one’s credit is as easy as sending some dispute letters to the credit bureaus then why doesn’t everyone have good credit?”
― Tyler Gregory
Aren’t you thinking the same thing?
Read on to know exactly how the agencies work.
How Do Credit Repair Services Get Negative Items Removed?
Every company will have its own procedure for rectifying your score. But there are some methods that nearly every agency uses.
1. Remove Inaccurate Data
Most companies assign a personal advisor to every client. This professional will identify all the incorrect data that can be disputed with relevant evidence. The best credit repair services also assign personal case advisors to handle bad scores generated due to identity theft.
2. Send Goodwill Letters To Your Creditors
A common tactic used by companies to remove negative items is to send goodwill letters to clients’ creditors. Credit repair services ask the lending agencies to remove the negative items that they had reported to the bureaus. This strategy does not guarantee positive results every time but is still effective.
3. Send Challenge Validation Letters
A challenge validation letter is sent to a creditor asking for proof that an individual’s debt is valid. If the lender cannot prove the same, the best credit repair services can ask for the removal of that specific debt from the client’s record.
4. Cease And Desist Letters
Cease and desist letters are sent to creditors requesting them to stop contacting an individual for a debt. The Fair Debt Collection Practices Act says that a creditor has to cease contacting a person if he/ she sends them this letter. However, not all credit repair services can offer this type of assistance.
An individual enjoys the right to dispute any questionable item in his/ her credit report. All credit bureaus are bound by law to respond within 30 days of receiving a dispute letter challenging such items. All the best credit repair services specify the number of disputes a client can file in a single billing cycle.
How Much Time Is Needed For Repairing Your Credit?
The time taken for repairing scores will vary from one individual to another. On average credit repair services can take anywhere from three to six months to correct the situation. If your case is not too bad and you follow the best practices that we discussed above, then it may not take as long as six months to fix things.
How To Find The Best Credit Repair Services For Your Case?
You may be financially stable but you have to prove this fact to creditors and other entities, and a good credit score lets you do just that.
If you suffer from a poor score, then you must hire reliable credit repair services. This is how your financial stability is linked to hiring the best services.
So, how do you find a trusted credit repair company?
1. Take Advantage Of Free Consultations
Almost all the best credit repair services offer free consultation to potential clients. Take advantage of this offer to get a brief but insightful overview of your case. An agency will also outline a strategy that can be implemented to improve your score. The meetings will also help you in assessing various agencies without paying any fees.
2. Assess The Feedback About Different Credit Repair Services
There are various online platforms where people post reviews about different services. Scan resources such as Google, Yelp, Angie’s List, etc. to read the feedback about different agencies. This will give you an idea about the quality of services offered by different credit repair companies.
3. Compare Fees Payment Options
To find the best credit repair services to improve your situation, you must compare the fee payment plans offered by various entities. Some agencies will ask for a flat fee while others will let you pay a fixed sum every month. Choose whatever model suits you.
Are There Any Potential Hazards That You Must Know About?
Yes, there are and to avoid them you must…
Know The Law
Credit repair services are governed by the Credit Repair Organizations Act. It directs them to:
- Refrain from making misleading claims/ statements about their services.
- Enter written contracts with their clients.
- Include a provision in the contract that allows clients to cancel the arrangement.
Keep in mind that credit restoration companies cannot demand payment until they have finished their services. To get around this rule, companies use a model consisting of an initial set-up fee followed by monthly installments.
The Fair Credit Reporting Act empowers clients to dispute errors for free.
You must stay clear of companies that tell you:
- They can improve your score without accessing reports from the main credit bureaus.
- They will create a new identity and credit report for you.
Nothing changes your life more, other than God and love than moving your credit score 120 points.
― John Hope Bryant
Hiring the best credit repair services is essential for communicating your financial stability to creditors, insurance agencies, and other service providers.
The best approach is to follow the best practices to ensure you do not get negative items in your report. But sometimes we get into situations that are out of our control and that can affect our scores.
In such situations, you must without any delay get in touch with reputed credit repair services to fix your score.