Are credit score woes keeping you down? If you have a lower score, it could be stopping you from getting a loan or the rental unit you really want. And while it’s possible to get an investment property loan with bad credit, it’s much harder and costs you more.
The good news: you don’t have to settle for a low credit score forever. Keep reading to find out how credit repair works and what you can do to help work to see your score rise in the future.
What Is Credit Repair?
Credit repair refers to a series of activities meant to address negative items on your credit report. These items are those that bring your score down. Credit repair services tend to concentrate on inaccurate negative items that can be removed or corrected.
Is Credit Repair Good or Bad?
Credit repair is definitely a good thing. If it’s done right, it can make your credit reports more accurate—and may improve your score if your negative items are unfair or inaccurate. And you can take some steps to help repair your credit yourself.
What Can Credit Repair Remove?
Credit repair works to request removal of inaccurate negative information on your credit reports. In general, credit repair doesn’t remove accurate negative items on your credit reports. Some things a credit repair process can uncover and get corrected include:
- Accounts that don’t actually belong to you.
- Duplicate accounts, such as debts that are sold multiple times and appear as separate accounts on your credit file.
- Payments reported as late that weren’t actually late.
- Incorrect balances that can lead to incorrect credit utilization amounts.
- Inaccurate accounts that may be the result of identity theft.
- Incorrect inquiries, including hard inquiries you didn’t approve.
- Inaccurate data or personal information, like misspellings or old addresses.
- Missing accounts that could be positive items on your credit report.
- Accounts that are actually open when they’re recorded as “closed” and vice versa.
- Incorrect public information like foreclosures and bankruptcies.
How Much Does It Cost for Credit Repair?
The cost for credit repair depends on the route you take. You can DIY credit repair, and that can cost a decent amount of your time, plus some expenses for printing and mailing letters and documents.
You can save yourself a lot of time and hassle by working with leaders in credit repair, like Lexington Law or CreditRepair.com. The costs for credit repair services depend on what’s being provided. Many organizations charge a monthly fee to match the service level you choose. According to CreditRepair.com, its most popular service level costs $99.95 per month.
Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.
Common Steps to Credit Repair
Now that you know a little more about credit repair, you may want to start repairing your credit. Whether you work with a consultant or start the process on your own, the steps to credit repair are similar. But keep in mind—you won’t see results overnight. Credit repair takes time and effort.
1. Get copies of your credit reports
Get started by finding copies of your credit reports. For the best outcomes, order reports from all three of the major credit bureaus—TransUnion, Equifax and Experian. But keep in mind that your credit information will vary from bureau to bureau. Some bureaus have information that the others might not have, so you might see errors on some reports but not on others.
You can get a copy of your credit report from each bureau via AnnualCreditReport.com. This free service offers one credit report per year from each bureau, but during the COVID-19 pandemic, you can get a copy weekly for a limited time. If you work with a credit repair service, they usually help you get copies of your report and may provide access to updated reports as long as you’re a client.
You can also sign up for ExtraCredit to keep an eye on your credit reports while enjoying other benefits, such as cashback for qualifying for offers.
2. Look for inaccurate information
Carefully look through all your reports for inaccurate information. It’s a good idea to get any inaccurate information taken care of—including typos or incorrect addresses. But the main reason you’re doing this is to get information fixed that negatively impacts your credit.
Wondering how credit repair works? To really understand credit repair, and what to look for on your report, you need to understand what impacts your score:
- Payment history. Whether you pay your bills on time and as agreed impacts your credit. Inaccurate late payments listed on your report can drag your score down—sometimes by a lot.
- Credit utilization. How much of your revolving credit you’re using can impact your score. Run up your credit card balances and your credit can go down. It’s important for account balances on your credit report to be listed correctly for this reason.
- Credit mix. Whether you have a good mix of revolving and installment credit makes a difference to your score. If possible, try to have a decent mix of accounts on your report. Read up on which bills help build your credit history.
- Credit age. The average age of your open accounts and overall age of your credit history plays a role in your credit score. Accounts marked closed when they’re open or those with incorrect dates can be an issue.
- Hard inquiries. Hard inquiries occur when someone checks your credit to evaluate you for a loan or other debt. These can bring your credit score down a bit. If you didn’t approve a hard inquiry before the fact, it shouldn’t have happened and shouldn’t show up on your report.
3. Send a request for investigation to the credit bureau in question
Once you identify inaccurate information, you can send a written request to the credit bureau to challenge it. Include a copy of your credit report with the inaccurate information circled or otherwise highlighted. You should also include an explanation of why the information is incorrect and documentation that demonstrates your point.
It’s typically best to send a dispute letter for each error in your report for organizational purposes and clarity. But keeping up with all these documents and letters can be a massive pain—which is why a lot of people work with experienced credit repair companies.
4. Follow up with your request if necessary
Credit bureaus have a certain amount of time to investigate any issues you send them. If the original reporter—often the creditor—doesn’t provide proper documentation within a certain time frame, the credit bureau must remove or edit the inaccurate data until it can be substantiated.
It’s a good idea to follow up to ensure this happens. That can mean pulling your reports again in a month or two. You also have to watch for correspondence from the credit bureau asking for additional information.
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What Credit Repair Isn’t and Credit Repair Scams to Watch for
Working with a credit repair service is a great idea—if you have reasonable expectations and know what to look out for. Credit repair can’t magically fix all of your credit problems overnight. Some things credit repair can’t do include:
- Guarantee your score will go up.
- Promise an overnight boost in your score.
- Remove accurate and fair negative information from credit reports.
If you come across credit repair “experts” who claim they can do any of the above, steer clear. Remember: professional credit repair services don’t work to improve your credit score. They work to make your credit reports more accurate. Any credit score improvement can be a byproduct of removing inaccurate negative information from your reports.
What Is the Credit Report Organizations Act?
The Credit Report Organizations Act (CROA) is part of the Consumer Credit Protection Act. It governs how professional credit repair services can be marketed and sold to consumers. Specifically, the CROA:
- Prohibits untrue or misleading statements when marketing or selling credit repair services.
- Governs the disclosures that must be provided when selling credit reporting services.
- Prohibits credit repair services from requesting payment in advance of providing services.
- Provides consumers with rights to cancellation of credit repair services.
Understanding Red Flags for Credit Repair Scams
Companies that don’t comply with the CROA may be scams. If a credit repair service seems to promise things covered in the above section on what credit repair isn’t, you probably want to avoid them. Some red flags include:
- Guarantees or promises that your score will go up by a certain amount or within a certain time. While professional credit repair services could improve your credit score, these companies can’t make such promises.
- Demanding payment upfront before services begin. Many professional credit repair services operate on a monthly payment model, so you pay for services as you go and they work for you. If a business asks for substantial payment upfront to correct your credit and score, consider looking for a different service.
- Inability to answer your questions satisfactorily. Since you can DIY credit repair, the reason to pay a service is for their knowledge and experience. If someone doesn’t demonstrate competence in this area, you may not want to pay for their services.
- Asking you to lie or in any way misrepresent yourself or your history. If you feel a company is asking you to do something illegal or unethical, this is a definite red flag and you should avoid working with that service.
Work To Repair Your Credit Now
You can definitely work to repair your credit yourself. But if the task proves to be too complicated or time-consuming, there are plenty of credit repair services available. You can sign up for credit repair services today to work on getting your credit reports as accurate as possible. Consider working with Lexington Law Firm, a reputable credit repair leader that follows the law as it works with clients.
This article originally appeared on Credit.com and is republished here with the author’s permission.
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About the Author
Credit.com is the only company of its kind to be founded and run by leading credit experts including journalists, authors and consumer advocates. We’re committed to helping consumers understand and master the confusing world of credit and improve their financial standing by recommending products and actions that are in their best interest.