When ready for a change, freedom from financial burden, you have a number of reputable and viable options. However, there are some people and companies more interested in taking your money than helping you make a change in life. These companies, often called credit repair agencies, are up to no good. Keep in mind that your goal is to take charge of your credit, not make things worse.
While there are a few credit repair agencies that are honest and hard-working, most are out for nothing but your hard-earned money. Paying a company to fix your credit is usually a waste of time and money. The reason is that while most of the negative entries are removed, they unfortunately show up on your credit report a few months later. Therefore, be very careful about trusting credit repair agencies.
Typically, credit repair agencies do nothing worthwhile. Sure, they some might include your credit but keep in mind they do nothing more than what you could do on your own. In addition, using this type of business might also mean you are now at greater risk for identity theft, direct mailings, and unsolicited email, which once those start, they are nearly impossible to stop.
The goal is to protect yourself against credit repair agencies. In fact, we recommend you never share your personal information with anyone you do not now or never surrender your right to handle your own financial issues as you want done. Credit repair agencies will usually make you heavy promises to help you get out of debt and improve your debt. We urge you to use caution with any type of promise.
Depending on the credit repair agency, some will request that you pay them every month. In turn, this money would be used to pay creditors on your behalf. Unfortunately, what happens many times is that your money is mismanaged, meaning they pay your creditors late. Therefore, rather than helping you with improving your credit, you end up with more “late” reports on your credit report. The result – your FICO score begins to drop!
Another thing to watch for when you find credit repair agencies is that many will pose as not-for-profit companies. In fact, some will go as far as telling you not to make any payments whatsoever! Then, you are charged a hefty upfront fee, as well as monthly fees that supposedly go into a trust account. However, months go by and finally, the credit repair agency will convince your creditors to settle on less money owed, which then makes your account as “uncollectible”. In addition to ruining your credit, this also means you could have 90-day late scores on your credit report.
Look at it this time, all the money the credit repair agencies supposedly saved you, which was money you owed, is now considered as income as the IRS. The bottom line is that if you had a debt of $10,000 and chose to settle the account for $6,000, you would have a difference of $4,000, considered as income! Now, you have your credit in a bad state and you have reported income that you never even earned.
Credit repair agencies make empty promised to help you improve and clear up credit problems by writing letters to the credit bureaus that state information being reported is false. Therefore, credit repair agencies will have the information removed but while also investigating your account. During this time, you will be sent a cleaned up copy of your credit report, which gives you the impression that you now have good credit, which is false. However, once you pay off the agency, you will find that those cleaned up items start to creep back up on your credit report.
When working with credit repair agencies, it is important to understand that only inaccurate information can be removed, once you have proven wrong. In other words, if you have negative information and it is accurate, it can never be removed although it will eventually stop showing on the credit report. Unfortunately, some credit repair agencies will promise that they can remove ALL your negative credit, which is very misleading.
Just remember, you have legal rights for getting your credit repaired the right way. You can do this on your own FREE. If you find the work too daunting, some great financial attorneys exist that can help. However, we suggest you avoid credit repair agencies since most are dishonest and will do you more harm than good.
