If you are looking for a loan but your credit score is too low for you to qualify for the best rate, or for a loan at all, given tightening credit markets, you may look for some outside help. The credit repair industry is ready to help fix your bad credit, and let you qualify for a loan. However, the Better Business Bureau warns that some of these companies are dishonest.
Disputing Negative Entries
The way that most credit repair services increase credit scores is by getting negative entries removed from your credit report. They commonly file disputes with credit reporting agencies. By law, if the credit agency receives a letter from a consumer disputing an item in his credit file, the agency must attempt to verify the accuracy of the information with the creditor. If the creditor fails to respond in a timely manner, the agency must remove the negative entry. Many credit repair services will repeatedly file disputes, hoping to catch creditors or agencies off guard so that they will not verify the information on time and be forced to remove the entry.
No Time To Spare
If you are looking for a mortgage loan, the 60 days or more that conventional credit repair takes is not acceptable. Rapid Re-score works if you have proof that a negative credit entry is incorrect, and can submit that proof to the credit agencies. This is an expensive service at $20 to $30 per change per bureau. You can also find services that review your specific situation, and recommend actions that you can take to significantly increase a credit score, sometimes within weeks. These increases in score can be enough to allow you to significantly reduce your interest rate on a mortgage or other loan.
Credit Counselors
While not officially part of the credit repair industry, credit counselors work by helping debtors work out acceptable payment plans with their creditors that move them towards paying off their bills. Counseling takes time to work through the problems, and it may not fit the needs of many people who are looking for the instantaneous results of credit repair. Still, you might learn more long-term financial management skills that will help you continue to become more financially sound using a counselor. Ultimately, helping you pay off debt will repair your credit naturally, over time.
Warning Signs
While many credit repair companies pride themselves on running clean operations, there are some unscrupulous people in the business. If you are thinking of using a credit repair service, stay away from any that require you to make up-front payments before they perform any services. Do not work with a company that encourages you to get a new Social Security number or federal tax ID number, as this is fraudulent. Be careful if the company does not advise you of your rights and tells you not to contact a credit agency directly.
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