As far as I know, I don’t have any major problems with my credit. However, if I were on the verge of applying for a mortgage or car loan, I would tend to be more paranoid about my credit and would look into reviewing my credit history with a more eagle eye. If you’re in this position, then the need to fix any sign of bad credit should become a priority for you. What are your options in this case? This time out, let’s take a look at what’s in store for you if you decide to fix your bad credit on your own vs opting to use a credit repair service.
Should You Fix Your Bad Credit Yourself or Go With A Credit Repair Service?
Know Where Your Credit Stands
We’ve mentioned this quite a bit before, but here’s another reminder: to get the process started, you should first need to know what your credit score and report look like. If you haven’t already done so this year, you should head over to AnnualCreditReport.com to get your free yearly credit reports from Equifax, Experian, and TransUnion. Or you can choose to buy your reports from those companies directly.
After you get a hold of your credit reports, here are some of the things you should look for:
- Errors with your name and/or address
- Accounts that aren’t familiar to you (may be a sign of identity theft)
- Accounts that don’t list payments you’ve made
- Accounts that are listed as open when they should be closed
- Mistakes about court rulings, bankruptcies, or other public information
Now suppose you find out that a bank loan you paid off four years ago is popping up as still open. After you gather the statement or paperwork that shows you made the final payment, you can take two routes —
Fixing Bad Credit Yourself
Taking matters into your own hands will be your lowest cost option. For errors on your credit reports, you can go to the credit bureau’s website and start the dispute process online with Equifax, Experian, or TransUnion. It can take 30 to 45 days to hear back from the companies, which will attempt to verify the information you want to dispute. If they can’t solve the problem to your satisfaction, you can add a personal statement to your credit report. It doesn’t cost anything to initiate a dispute, but you will need a current credit report.
In some cases, it might be beneficial to contact your creditor, say if they didn’t accurately report an account as paid or closed. Now many people have bad credit because they have been remiss with their bill payments, so if your credit looks bad because you haven’t been consistent with payments, then it’s time to get disciplined! Missed and late payments typically spell trouble for your credit and your status with your card company. And for those who want to re-establish their credit or who are just starting out with developing a credit history, applying for a secured credit card may be a consideration.
Once an error’s fixed, you may want to share the revised credit report with any lenders who have pulled it before. That way, you might have a shot at a lower interest rate or better terms for your loan or account.
Also, setting a spending plan (or making a budget) and building up savings can help you avoid potential financial traps that can hurt your credit. Just remember that when working to repair your bad credit and fixing what’s in your credit report, it helps to be persistent and patient.
Using a Credit Repair Service
One strike against DIY credit repair is the fact that working through the issues takes quite a lot of time. Between digging up the paperwork you’ll need for disputes, contacting the credit bureaus and/or lenders, and waiting for the responses, you’ll probably spend hours, if not days. Since time is money, can paying a credit repair service be worth it?
So what can credit repair services offer us? They might offer to access your credit reports, locate the errors, then begin the dispute process and take care of the documentation. Fees may vary. In effect, they do a lot of things that we can do on our own, plus they’ll charge quite a bit for the service.
Unfortunately, the FTC is warning that many credit repair outfits may be out to scam us. Red flags can include pitches that demand a payment before any services are rendered, an invitation to create a brand new identity for you (the customer), and an unwillingness to disclose what your rights are as a credit repair client.
What If You’re Stuck With Bad Credit?
It’s important to note that there’s no magic bullet to fixing your credit — especially if your credit is bad because of issues with bills and credit card payments. This is not something that an outside company can fix for you. The Better Business Bureau points out that no can can remove accurate negative information from your credit report! While you can improve your credit report by making regular payments over time, you still can’t reverse a bad record overnight.
Still, if you want a helping hand and insist on working with a credit repair company, then make sure you check out the company’s reputation before signing anything. Do your due diligence and check the Better Business Bureau, as well as forums and financial reviews on such services before moving ahead.
What about rapid rescoring? If you’re working with a mortgage broker or lender, you might be offered access to rapid rescoring. A rapid rescoring service may be helpful if you’re going through the mortgage application process and need a fast turnaround, but results aren’t guaranteed.
If you’re looking for additional support for dealing with your bad credit, then you might think about turning to consumer credit counseling. You can visit the National Foundation for Credit Counseling for more information. Here is a list of other debt management resources you can check:
- Debtor’s Anonymous for providing support and fellowship among recovering debtors
- Lower My Bills for home refinancing, debt consolidation and debt management
- Home Foreclosure Fighter for loan modification services
- for mortgage refinancing and personal loan needs
Copyright © 2010 The Digerati Life. All Rights Reserved.
{ 9 comments… read them below or add one }
Using a service is always a better method. Just make sure the one you pick is legit and has a history of good service. For a small premium you get better resources by using a credit service.
I advise trying to fix your credit yourself first. I could not disagree more with Alex Jordan’s comment above that using a service is ALWAYS better. The service does things you can do yourself, they charge you, and if they don’t scam you, they may do a worse job or take longer than you would. Try fixing your credit yourself first. Take control. If it does not work, at least you are familiar with the process which may help you identify a good repair service. I do agree with Alex that you need to pick a legit company with a good history. Do your homework.
Credit repair is a scam. That is my understanding. Avoid it. Only errors can be removed from credit reports.
You always hear a lot more bad than you do good when it comes to these type of programs. Personally, I would look for ways to improve my credit on my own. Do some research online and you will probably be much better off.
Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein
Obviously, people that come to this site looking for advice have not figured out how to do it themselves. No matter what you may think about using a service, sometimes it’s the right option for those that year after year take a step forward and fall two steps back. If someone wants to use a service to fix their credit, they should be congratulated like the alcoholic that walks into their first AA meeting.
Do it yourself! There is nothing that they will do that you can’t do for yourself. The big firms like Lexington Law have you fill out an online form that is guaranteed to get you nowhere. “I have no knowledge of this account” and “This is not my account” will get you nowhere!
Although, there are a select few repair organizations that can supply you with some good advice.
So sick of hearing “credit experts” saying don’t use a credit repair service. People can use a credit repair company if they want. It is a viable option and if you don’t want to don’t tell everyone else not to.
You mentioned Rapid Rescoring at the end. Rapid Rescoring is a very powerful tool used to update your credit report with new information. In fact, I used rapid rescoring to increase my credit score 40 points in about a week. How? It’s easy. I paid off all of my credit cards and instead of waiting for my creditors to update my credit report (which can take 45 days) I did a few rapid rescores. I found a service that offers permanent rapid rescore direct to consumers. For more info, try this: creditrepairwholesale.com/Rapid_ReScore.html
There are two options when it comes to credit repair and restoring your credit:
1) Do it yourself credit repair, or
2) Seek the advice of a professional
Which option you choose depends on each individuals personal circumstances and each individuals case.