Today I want to talk about credit repair. What is it? And how can it help fix your credit score?
Before I get to that, however, I want to talk about the things that cause credit problems. Obviously, late payments and collections both contribute to a negative credit score. More recently, I have also seen broken apartment leases negatively impacting people’s credit scores.
There is the common misconception that when you pay off a past-due bill, it is no longer on your credit report. This is wrong because even if you have a $0 balance, the damage is done and it is still reporting as either a derogatory or late payment on your credit report. In fact, it will remain on your report for seven years unless you or a credit repair company works on removing it.
Something else that you need to know is that 83% of all credit reports today have errors of some kind on them. These can be anything from the wrong dates being reported, the months that you have paid off not being present, or items that aren’t even yours appearing on your report. It’s important to be aware of these errors because your score can make or break your ability to obtain a mortgage.
So what actually does credit repair do to help you? Credit repair companies basically bombard credit bureaus with letters questioning every negative thing on your credit report. Is it effective? Absolutely, because, under federal law, the credit bureaus have just 30 days to respond back and clarify whether that item is really true or not.
If the creditors do not respond within 30 days, federal law requires that the negative item come off your credit score permanently. Since the credit repair companies question these things, the bureaus have no choice but to remove it from your report if they do not get a response in time.
You should know that there are lots of people in the credit repair business that take your money and then not do anything. You need to be very careful with who you hire to do this.
I can always refer you to several credit repair specialists I’ve worked with successfully who do a wonderful job. Or, you can ask around and get some references from people that have used them personally. You want to be sure that they are people who know what they are doing.
If you have any questions, please feel free to reach out to me. I look forward to speaking with you.