Reader Question: What exactly is credit repair and what do I look for in a credit repair service?
There are two things that will repair credit without question, and they are the passage of time, and the timely payment of debts.
There are, however, numerous credit repair agencies in business who claim to be able to repair poor credit. Sometimes these claims are quite specious, and involve unethical or even illegal practices, that include disputing legitimate credit report line items, or creating new identities.
However, this is only a temporary fix. If the item is legitimate, even if it is removed, it can reappear later. A good credit repair agency will pay close attention to your credit report, and diligently petition to have any inaccurate, illegitimate or out of date items removed.
Another type of credit repair service to avoid are credit repair agencies that are merely merchants selling overpriced goods to you on credit. This is a scam, and it works this way: The merchant gives you a proprietary “credit card,” that you can use to purchase items from their catalog.
The card is not a major credit card, and is useful only for their catalog and nowhere else. They may pitch it as a “credit rebuilder” card or something to that effect. Usually, you will have to make a down payment for any purchase.
The agency promises to send reports to credit reporting agencies on a monthly basis, to notify them of your timely payments, and therefore, help to repair your credit. These services are of little use, since you are first buying goods that you could buy for half the price at any local department store, and second, they are doing nothing to help repair your existing credit blemishes.
That said, and understanding that scams exist ahead of time, some credit repair agencies can provide a useful service-just be careful when choosing one, because there are a number of scams out there. The first thing to realize is that there is nothing a credit repair service can do that you can’t do on your own. There are no special secrets that they are privy to, and they have no special “insider” connections.
They cannot create a new identity for you (legally), they cannot erase legitimate items, and they cannot remove bankruptcies before the allotted time of ten years has passed. But, it does take time to analyze your credit report and to dispute any items that can be legitimately removed, and depending on your own time constraints, it may be worth it to you to hire a service to do this for you.
The repair service will handle everything for you, including obtaining your credit report, analyzing it for errors, and sending out documented dispute letters and following up on them. Although they have no special secrets, they may be able to add an extra element of professionalism to the process that will help in expediting your credit repair process.
Keep in mind though, that this is merely a service, not a miracle, and the fees should be levied accordingly. Steer clear of agencies that charge excessively high fees, and require payment before services are rendered. The Credit Repair Organizations Act requires that credit repair agencies do not charge their fees until after the services have been rendered.
