Credit repair is big business, and there are many companies that will promise to help you get out of bad credit problems. There are a number of legitimate resources that can help you in improving your credit score but there are also a number of less than reputable companies out there that will take your money but offer you few (if any) valuable services. A few basic tips will help you see the difference:
Tip #34: Seek professional help.
If you are in over your head, and your credit is so bad that you cannot get a loan and may even be facing bankruptcy, you may want to seek help from professionals. There are a number of financial professionals that can help you with credit repair:
Bankruptcy lawyers and bankruptcy advisors: Bankruptcy lawyers can help represent you in bankruptcy proceedings. Advisors can help you decide whether to apply for a bankruptcy and how to proceed once you do decide to file.
While getting a bankruptcy lawyer and filing for bankruptcy can be upsetting and can dramatically affect your credit score for many years, it can also give you a chance to start over financially and can help you reestablish good credit again in the long run.
Credit repair companies and credit counseling companies: These companies can help you by acting on your behalf with credit companies, by advising you on what you can do to repay your bills faster, and by helping you make better financial decisions.
Accountants and tax services: Accountants and tax filing services can help you make the most of your money by making sure that you do not end up overspending on taxes.
Bankers and bank officers: Most banks today want to not only help you keep your money but are willing to work with you to make the most of it. As a banking service, many banks today offer free investing advice, saving advice, and personalized meetings with bank officers that can help you figure out your money situation.
Lenders and bad credit lenders: How you deal with lenders will determine how well your credit score works. Avoiding too many inquiries by not applying for too many loans, establishing long-term business relationships with bankers, and doing business with bankers in an organized and professional way (i.e. paying your debts on time) will go a long way towards giving you a credit rating. In turn, a good credit rating will make it easier to deal with lenders.
Tip #35: Look out for credit repair companies.
Many companies out there advertise that they can help you with credit repair, but the quality of these services – not to mention what they offer – varies widely. Some companies really can help you with credit repair while others are actually under investigation for suspect business practices. If you decide to seek help from a credit repair company, be sure that the company is legitimate and offers you viable services.
In general, you should be looking for non-profit credit counseling services rather than credit repair companies (some of which are really just lenders offering home equity loans anyway, which are of limited use to you if you want to improve your credit).
Check to make sure that the company has good standing with the Better Business Bureau and clients who are happy with the credit repair services they received from the company. Always read the paperwork carefully before you sign and make sure that you understand how much you are paying for and how much you are paying.
Before deciding to seek help from a credit help or credit counseling service, be sure that the problem cannot be resolved on your own. Indications that you may need credit counseling include:
- You cannot pay your bills and avoid the necessities of life.
- You avoid the phone, the mail, and the door because you are being harassed by collection agencies.
- You have avoided going out because you feel terrible about your financial state.
- You have no idea how you will repay your bills and loans – you do not know where to start.
Tip #36: Seek free or inexpensive help before seeking paid credit repair help.
If you need credit repair, odds are good that your finances aren’t in the best possible shape. That likely means that you should attempt to spend as little as possible on credit repair – the money you save can be channeled into repaying your debts.
Also, seek out free or inexpensive sources of credit repair help. Some non-profit credit counseling services are actually registered charities and will work on your behalf. If you can get help from one of these companies or undertake credit repair yourself, you will be able to save money quite easily.
In addition, these companies tend to be more legitimate than credit repair companies that take your money, anyway.
Tip # 37: It will be easier for financial experts to help you if you seek credit repair help sooner rather than later.
If you do decide to seek credit repair help from the experts, it makes sense to seek that help before your financial situation spirals too far out of control. After all, credit repair experts can do little for you if your credit and financial situation is so bad that the only option left to you is bankruptcy.
Tip #38: Look out for credit repair scams.
There are a number of credit repair scams out there. These scams often promise to help free you of bad credit, when in reality the “experts” offering these services will either overcharge you, involve you in illegal activity, or actually put you in a worse financial situation. Look out for these most common scams:
- Credit repair companies that tell you to lie on loan applications or suggest that you develop a second identity. This is illegal and dishonest. If a company suggests that you open accounts in a new name or falsify your information on loan applications, run, don’t walk, away.
You can be charged with fraud for doing this – and you will be held responsible for your actions, even if you were acting under the company’s advisement. You certainly don’t want to add legal troubles to your credit woes. - Credit repair companies that charge you fees or hidden fees for things you could do for free yourself – such as work out a budget. Also be wary of companies that ask for money up front.
- Credit repair companies that promise to pay your creditors from money you pay to them and which they keep in an escrow account. This is a common scam and it presents a huge problem for the debtor.
Here’s how it works: the debtor gives money to the credit repair company, presumably for paying off debts. The company places the money in an escrow account where it grows. The idea is that the company will eventually pay off your debts when the amount reached in the account matches the debts.
The problem is that in the meantime, the credit repair company is removing some money from the account for administrative fees while creditors are becoming more and more anxious, increasing the interest on the debts and even starting legal action against the debtor. This type of “credit help” can actually ruin your credit rating! - Credit repair companies that pressure you, don’t listen to you, or want you to sign a contract you have not read. Such companies are not to be trusted and should be left well enough alone.
- Companies that offer you fast or instant credit repair – no matter how bad your credit. This is simply a misleading claim that no company can legitimately deliver on. If you have very bad credit, it may take years to fully repair.
In many cases, these companies will claim that they can remove your poor credit history from your credit report by disputing it. This is false information. You simply cannot remove true and accurate information from your credit report. It is true that a credit bureau must investigate a claim of inaccurate information within thirty days, but this does not mean that the company will automatically remove the information.
In fact, if the information is accurate, the data will stand. Credit bureaus are aware of this common credit repair scheme and have become very good at detecting it. Many credit repair companies (and even some individuals) will try to dispute every ding on a credit report, hoping that the backlog of disputes will cause the credit bureau to automatically remove the offending items from the report (the credit bureau is legally required to remove disputed items it has not investigated within 30 days). This technique is a scam and is dishonest since you are not disputing inaccurate information.
Refuse to do business with credit help companies that use this practice. - Companies that don’t tell you your rights or try to take money for things you could do yourself. You can get copies of your own credit reports and have the errors on them fixed for free yourself – a company that does not tell you can do this yourself ifs taking money form you for things you can easily do yourself.
It is a dishonest practice, and companies who follow such business practices should be avoided at all costs.
Also, if a company does not advise you of your credit rights, then that is an indication that they are not really on your side in the first place. Why would you want to do business with a company that does not help you?
Tip #38: Get a good team on your side to help you with your credit score.
A good team of professionals can help you get your credit score back in shape. Your most important member of your team is yourself – you are the one with the financial agency and (with this ebook) the knowledge to become your own best advocate in credit repair. Besides this, you may want to check with your local library for financial help books.
You may also want to include financial experts such as credit counselors or others to help you. If you decide to seek a team of experts to help, be sure that you check each person’s credential, standing with the Better Business Bureau, and past clients to make sure that the person or company can really help you. Beyond this, make sure that you sign a contract or agreement with each professional member of your team.
Tip #39: Your bank has good and reliable credit information.
One free and professional source of credit information is your bank. Your banking officer may be able to offer you a great deal of professional, free advice, especially as banks are trying harder and harder to provide good personal services to customers.
Your bank may also have a number of credit solutions – such as overdraft protection – that can help you keep your credit in good repair. Banks are realizing more and more that many of their clients are dealing with less than ideal credit. Banks are trying to meet the demands of this new group and can actually be a powerful ally for those who are trying to improve their credit.
