You apply for a credit card or loan only to be denied unexpectedly. After speaking with the creditor or lender, you learn your credit score is on the lower end and needs work. Instead of settling for subpar credit products with exorbitant interest rates and fees, you decide credit repair is the best course of action.
Should you do it on your own or hire someone to help you out? And how does the process work, and what should you expect? The answers to all of these questions and more are found in this guide.
What is Credit Repair?
Credit repair is the term used to describe the process of disputing or challenging errors or outdated information on credit reports. It can be done through a credit repair company, typically in exchange for a fee, or on your own through each of the major credit reporting agencies – Experian, TransUnion and Equifax.
How Does Credit Repair Work?
You’ll need to contact the three credit bureaus to initiate disputes. Here’s how to get started with each credit bureau:
- Experian: File a dispute by sending a letter and supporting documents to Experian, P.O. Box 9701, Allen, TX 75013. You can also visit the online dispute center at www.experian.com/dispute or call 866-200-6020 to start the dispute process.
- Equifax: Disputes are also accepted by mail, phone or online. Draft up a dispute letter, attach any documentation to corroborate your claims and send it to Equifax Information Services LLC, P.O. Box 740256, Atlanta, GA 30374-0256. Or call Equifax at 1-888-378-4329 to file a dispute by phone. Equifax also accepts online disputes at https://www.equifax.com/personal/credit-report-services/credit-dispute/.
- TransUnion: Like the other credit reporting agencies, TransUnion lets you initiate disputes by mail, phone or online. Send a written request to Experian, P.O. Box 9701, Allen, TX 75013, call 866-200-6020 or visit www.experian.com/dispute to file your dispute.
Some instances also warrant contact with creditors, lenders and collection agencies as well to have negative credit items removed or updated. Consult with a licensed, reputable credit repair company for advice.
Is Credit Repair Legal?
Yes, it’s legal to hire a company to help repair your credit. Or you can work to repair your credit on your own. Be sure to research the companies you’re considering if you decide to hire help.
Credit repair scams are prevalent and could leave you worse off if you aren’t careful. In addition, any companies that use high-pressure sales tactics in an effort to win you over should be avoided.
The Consumer Financial Protection Bureau (CFPB) warns consumers to steer clear of credit repair companies that:
- Request upfront payment for services as it’s illegal to do so under federal law.
- Offer guarantees that negative information will be removed from your credit report.
- Suggests you dispute negative information on your credit report, even if it’s accurate.
- Fails to explain your rights as a credit repair client.
- Encourages you to avoid contact with the three major credit bureaus – Experian, TransUnion and Equifax.
Credit Repair vs. Credit Counseling
Both services can help you start working towards a better credit score. However, credit counseling is more of an educational resource. You’ll connect with a credit counselor – often free of charge – who can help you come up with a better plan to manage your finances and get out of debt. You’ll also receive guidance on ways to improve your credit score, how it’s impacted by your actions and how to steer clear of bankruptcy and more long-term financial issues.
What Should Your Credit Score Be?
FICO scores – used by 90 percent of lenders and creditors to make decisions – are between 300 and 850. Here’s a breakdown of the credit score ranges:
- 300 to 579: Poor credit score
- 580 to 669: Fair credit score
- 670 to 739: Good credit score
- 740 to 799: Very good credit score
- 800 to 850: Exceptional credit score
Ideally, a good or excellent credit score is what you need to access attractive financing offers on loans and credit cards. A solid credit rating can also mean you’ll qualify for better housing options, employment opportunities (especially in the financial services industry) and lower car insurance premiums (in states that permit the use of credit-based insurance scores). When you apply for cell phones, internet, cable, or to have utilities connected in your home, a higher credit score could also help you avoid the security deposit requirements.
If your credit score is below 670, you won’t necessarily be turned away for credit. However, you’ll likely pay a higher cost to borrow funds. Your housing options may also be limited, and you could pay more for auto insurance coverage. Also, expect higher security deposit requirements.
Can You Improve Your Credit by Yourself?
You can perform the same services as credit repair companies on your own. Start by disputing inaccurate or outdated information with the credit bureaus to have the negative items removed. They could be dragging your credit score down, so it’s vital to have them removed to see the full impact of your efforts as you begin to improve your credit on your own.
Other ways to improve your credit on your own include:
- Bringing any past due accounts current and keeping them current moving forward
- Improving your credit utilization by paying down revolving balances
- Aiming for a credit utilization rate of 30 percent or lower
- Working with lenders and creditors or collection agencies to settle delinquent debts
- Entering into payment arrangements for a delinquent but open account to stop continued adverse credit reporting and prevent additional late payments from being reported
- Becoming an authorized user on a friend’s or relative’s credit card to start rebuilding credit
- Refraining from opening new credit accounts to avoid the negative impact on your score caused by hard credit inquiries
- Not closing old credit accounts in good standing to preserve your lengthy credit history or credit age
- Maintaining a healthy mix of revolving and installment credit
(Note: A secured credit card or credit-builder loan can also give your credit a boost. However, you should only apply for these items if you don’t have other active revolving or installment accounts in good standing).
How Long Does It Typically Take to Repair Credit?
It depends on your overall credit profile, the types of negative items being reported and your current credit rating. The timeline to repair credit is also dictated by the strategies you use to start improving your credit health.
If your credit report is full of errors and outdated information, you could start to see results quickly as these items are removed. However, accurate negative credit data means the credit repair process could take longer, and it could be some time before you start to see impactful results.
What Difference Does a Credit Repair Specialist Make?
Torn between repairing your own credit or investing in a company to do the legwork for you? Here’s when the latter could make sense:
- Your credit report contains inaccurate or outdated information, and you need assistance with the dispute process.
- You want to settle delinquent accounts and want to use the expertise of a credit repair specialist to help you reach a fair agreement with the creditor or collection agency.
- You’re dealing with a complex negative credit matter and have no idea how to move forward to have it resolved.
- You can comfortably afford the credit repair fees, and the company you’re considering is reputable and licensed to do business in your state.
How Much Does Credit Repair Cost?
Credit repair costs vary by the depth of service you opt to receive. Some companies charge as little as $19 per month, while others charge as much as $149 per month or more. You may also find companies that charge a flat fee for each item they delete.
Is It Necessary, and Should You Get Your Credit Repaired?
If a low credit score is dragging you down, credit repair is well worth it. Whether you do it on your own or hire a credit repair company, you can take the proper steps to start improving your credit health sooner rather than later. Plus, a strong credit score can help pave the way for a brighter financial future.
The Credit Pros offers credit-related services, easy-to-read credit reports, personalized score insights, and free consultations with certified credit specialists, all assisted by AI technology. The company has received an A+ rating from the BBB and provides a 100% 90-day money-back guarantee, indicating a dedication towards meeting customer needs.
The Credit Pros services have affordable pricing starting at $69 to $149 (with a first work fee) and do not require long-term contracts, all designed to meet various financial requirements. To learn more about The Credit Pros and their services, complete a brief form or call (727) 306-8201, and a specialist will contact you without any charge or obligation.
