There seems to be a plethora of companies advertising credit repair programs. Some claim that they can raise your score in a matter of weeks, while others promise to ease the burden of debt. Unfortunately, there is no magic formula to improve credit, although some company advertisements promise otherwise. Exercise caution when dealing with credit repair companies. It is better to work with a company that will develop a long-term solution to debt issues and put them on the road to repairing credit.
How Credit Repair Programs Work
Credit repair programs start out by looking for quick ways to raise your score. They usually do this by going through your credit report and disputing negative items with the credit agencies. The policies of the credit agencies mandate the removal of disputed information from your report until resolved. Resolution takes 30 days, and if no response comes by the 31st day, the item is removed from the credit report. This is something the average consumer can do, however the repair programs have more experience.
Debt Management and Debt Counseling
Some companies attempt to help you rebuild credit with debt management. Debt management companies, reduce your multiple payments to one. The debt management company takes on the responsibility of making the monthly payments to your creditors while you pay them. These companies also negotiate better interest rates and payment terms with your creditors. Credit counseling companies help you to repair credit by assisting in developing a budget and by analyzing your credit situation to determine changes that can raise your score.
Warnings
Some credit repair companies use unscrupulous methods. Reports of companies recommending customers obtain a new Social Security number to create a new credit history have been made. Credit repair companies may try to overload the credit agencies with multiple disputes in the hopes that some negative information is removed if the credit agency does not respond on time. Many credit repair companies mislead customers and take their money without actually delivering on their promises, according to the Federal Trade Commission. Some debt management companies take payments from customers without passing the payments on to the creditors, in essence making the credit history worse than before.
Do It Yourself Credit Repair
Before spending money on credit repair companies, you may want to look into repairing your credit on your own. Consumers are able to obtain their credit reports and contact the credit agencies to dispute errors on the reports. It also is possible to negotiate payment terms and lower interest rates with your credit card companies, just like debt management companies do. While rebuilding your credit takes time and patience, it can be done, and the Internet has tools to help you. The Federal Trade Commission offers advice for consumers looking to repair their credit.
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