Credit repair services can be of some use, but only if you don't have the time to personally review and dispute inaccuracies on your credit report. Otherwise, it is less expensive to improve your credit score by addressing errors yourself and practicing good money management skills.
Credit Repair Service Laws
The federal Credit Repair Organizations Act requires for-profit credit repair services to inform you of your credit repair rights. This includes the fact that you can dispute negative credit information without third-party assistance. Credit repair services cannot take any money until after they have performed services for you. Once you have signed a contract with a credit repair service, you have a three-day "cooling-off" period, during which you can change your mind and cancel the agreement.
Credit Repair Scams
Some companies that claim to repair or fix your credit may encourage you to engage in questionable and, in some cases, illegal behavior. For example, some may tell you to apply for a new Social Security number or to apply for credit under a business name and employer identity number. These tactics may be fraudulent, which will just add legal problems to your credit woes. Other credit repair firms may simply make promises they cannot keep. There is no way any third party can guarantee that a credit bureau or creditor will remove negative information from your report.
Credit Repair Self-Help
Repairing your credit consists of two parts. The first is to remove inaccurate information from your report. The second is to build a better credit history through managing your finances responsibly. After ordering your credit reports from the credit bureaus, you can request an investigation and deletion of any inaccuracies appearing in the reports. You can get one free credit report annually from each credit bureau through Annualcreditreport.com. To improve your credit further, pay your bills on time each month. Keep your credit card balances below 30 percent of your credit limit. If you have really bad credit, look into taking out a secured or low-limit credit card. Pay off your balance every month, and your credit rating will eventually improve.
Legitimate Credit Repair Services
While you can repair your own credit, you may still wish to hire a credit repair clinic to do the work for you. Since disputing credit reports and negotiating with creditors takes a lot of time, paying a professional to do it for you can make sense, particularly if you have a busy schedule and can afford the service.
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