When faced with the challenge of improving bad credit, most people feel a bit overwhelmed. Because of this, some will put the process off while others choose to work with bad credit repair services. Considering the average debt in the United States for credit card only is $3,000, it is easy to see why so many people are faced with the decision of credit repair. Although cleaning up credit can be somewhat daunting, you owe it to yourself to change what creditors, insurance companies, and employers think of you!
The key when choosing bad credit repair services is to make sure you work with a reliable, honest, and reputable company. Most often, you think of the ads that say, “Credit problems – no problem”, or “We can eliminate your debt”, or perhaps, “We can erase all your bad debt”. Although these statements all sound great, you should never believe them. Unfortunately, the country is flooded with fraudulent, credit repair companies. The truth is that only time, a good, conscious effort, and a personal debt repayment plan will get your credit out of the hole and keep it there.
In fact, the Federal Trade Commission states that these so-called, bad credit repair services will make constant appeals to people in debt and those with a less than favorable credit history. These companies are known for making some incredible promises. However, the problem is these promises are empty and meaningless. Every day, millions of people in the United States turn to these companies, handing over good money only to have one promise after another broken.
The important thing, which most people do not know, is that under the Credit Repair Organization Act, these “bad credit repair services” cannot demand you pay anything until all of the services are rendered. That means if they promise they can remove all your negative history, inaccurate or accurate, if they fail to do so, then you owe them nothing. Interestingly, this one promise is something you hear from most of these companies. With this, they can help you remove negative information if it is inaccurate. However, if the negative information is accurate, they cannot do anything about it.
If you are thinking about working with bad credit repair services, you need to pay heed to common warning signs. First, you would be asked to pay money before services are performed. Making matters worse, what you can do on your own in cleaning up your credit report for $50 or less, they will charge you anywhere from $300 to $600. Other warning signs include not explaining your consumer rights or describing how by law, you can help yourself, recommending that you not contact any of the credit bureaus, and suggesting you take on a new identity.
Another common practice performed by bad credit repair services is telling you to dispute every single item on your credit report. In this case, you would file a dispute letter for each item, whether it was inaccurate or not. Then, the credit bureau is inundated with all your claims so while they take the 30 to 60 days given them by law to investigate your claims, they wipe out most, if not all of the disputed items. Suddenly, your credit score jumps from 500 to 700! Unfortunately, as the credit bureaus begin finding that most of the disputes need to go back on your credit file because they are accurate, your score begins to drop. The bottom line is that this particular practice will actually worsen your credit report, meaning the bad credit repair services made things much worse for a large fee.
Remember, any bad credit repair services are required by law to provide you with a copy of the Consumer Credit File Rights under State and Federal Law before you sign a contract for their services. In addition, these companies are mandated to provide you with a written contract that outlines rights and obligations. Before you sign anything, read this contract carefully and make sure the contract specifies payment terms for services rendered, which would include the total cost, a summarized description of services to be performed, the amount of time it will take for results, guarantees offered, and the company’s name and address.
