Credit Repair Consulting

Dealing with bad credit can be an overwhelming challenge when you're inundated with phone calls, are receiving notes in the mail from collection agencies, or are worrying about how you're going to qualify for an auto loan. Contacting a credit repair consulting agency is an option for those seeking professional advice, but it can also be costly. Understanding the benefits and drawbacks of working with credit repair consultants can help you decide whether it's the right option for you.

Repair Reasons

Poor credit can affect your life in various ways, so reaching out to a credit repair consulting business can be a good idea. If you have bad credit, you may be turned down for significant loans, such as car loans or home loans. You may not qualify for credit cards, making it more difficult to improve credit scores by making timely payments. If you're approved for credit cards, these may carry lower credit lines, higher interest rates and bigger fees. People with poor credit also sometimes face high insurance premiums. Since some employers and landlords run credit checks on applicants, poor credit can also result in lost job and housing opportunities.

Types of Services

Credit repair consulting firms can help you improve credit in numerous ways. Professionals may help you read through credit reports and identify negative items, or potentially incorrect information, that can be addressed or removed. You may receive information about declaring bankruptcy, which severely impacts your credit in the short run, but may eventually offer you a fresh start. Credit repair services may also provide information about how to communicate with collection agencies or lenders to stem the flow of phone calls and letters. You may also receive tips on how to negotiate debt, so that you aren't liable for repaying the full amount. Credit consultants can help you work with lenders to reduce interest rates, and find ways to add positive credit to your credit reports.

Cost

One potential drawback with credit repair consulting companies is cost. Rates can run between $600 and $800 for a single applicant, or $1,000 to $1,200 for couples in 2010, according to Simple Solutions Credit Consulting. Some companies may charge for individual services, rather than one blanket rate, making it easier for you to tailor consultations to your needs.

Cautions

Beware credit consulting agencies that make bold promises to drastically improve your credit score in just a few days or weeks, or offer guarantees that you'll qualify for big-ticket loans. There's no way to guarantee that your credit will skyrocket by a specific number of points; in reality, it's probably going to take some time. Other companies may try to scare you into contracting with them, by warning that attempts to repair credit on your own will have disastrous results.