Whether you're looking to buy a house, start a business, or invest in your education, credit is key. The better your credit, the easier it is to obtain a loan and the lower your interest payments will be. Raising your credit score is no easy task, however, which is why many people turn to companies that fix credit card for help. Professional credit cleaning companies promise to boost your credit score, paving the way for a strong financial future.
While many repair companies offer a valueable service, others take your money while making little difference, and still others can actually damange your financial health. Even if a company is legitimate, it may not be the best credit repair service for your specific needs. The following credit company reviews will help you compare valid, effective repair services, finding one with the unique features that are right for you.
In this series, we’re going to take you through everything you need to know about your credit and how to improve your credit score. We’ll take a detailed look at how banks and lenders view your credit and why it is necessary to main good credit. You’ll know where to go in order to check your credit ad all of the factors that comprise your credit history. Small details may be keeping you from a good credit score; we’ll tell you what those are and how you can resolve them. By the end of this series you’ll know if you need credit repair services and exactly what that process might look like for you.
To start, we’ll dive into the basics of credit repair. This guide is a very important precursor to the rest of the series. You need to know exactly how credit works and what’s in your credit history before you can even start thinking about repair. You have undoubtedly heard ads offering free credit reports, credit scoring, and credit repair. You might know that your credit score isn’t quite as high as you want it to be. In that case, credit repair might sound pretty good to you. Is there someone that can help you improve your credit score quickly? Not exactly.
In order to understand the concept of credit repair or the steps that you must take to improve your credit score, it’s essential that you understand what credit is. In addition, you should also arm yourself with information about what goes into your credit report. You’ll need to know how credit agencies calculate your score and what that score means for your credit.
There are three major companies that provide credit ratings: Experian, Equifax, and TransUnion. Each of these companies uses the factors we discussed above to give you a clear score. However, they may individually receive slightly different information from creditors and lenders, which will make up your entire credit score. The Differences shouldn’t be large enough to make drastic difference in your score, but you should be aware that is the reason your number could vary slightly between these three companies.
In addition, FICO and VantageScore are two scoring products that these companies use to calculate your score. Essentially, these are tried and true equations that compile the most important data and create your score accordingly. You should also know that these systems weigh each area of your credit history similarly, but may judge more softly or harshly on different sections. This is another factor that could slightly differ your score from one credit agency to another. None of the numbers are necessarily wrong (unless you or a credit repair agency were to spot an actual mistake) they’re just different.
These are the companies that you can receive your credit score from, if you’re curious, and lenders will get your credit information from when you apply for a new loan. Keep in mind, checking your credit score regularly can actually damage your score slightly. You are allowed a certain amount of checks per year that will not affect your credit score. You are allowed one free check each year from each of these agencies. However, some of them also offer plans that allow more checks per year if you pay a regular fee. Each of these agencies has a slightly different policy, so make sure that you check on that information first before you ask for a report.
Each agency will score your credit report on a scale. You will be scored bad, average (or fair), good, or excellent depending on your credit history. The range of credit scores starts at about 300 and goes to 720 and up. 300 would be a bad score and 720 would be excellent. As the name suggests, most people hit the average or fair category which is around 630-689.
No doubt you’ve heard the term, but most of us know that credit is quite a complicated issue. There are a lot of factors and variables that seem mysterious. Let’s try and demystify the term “credit” and start with the basics.
For the most part, credit is a term that measures your history of borrowing money and paying it back. However, there are other factors that may also comprise your credit score. For example, if you rented an apartment and weren’t able to make the payments on time, that might be reflected on your credit score. On the other hand, making rent payments on time does not improve your credit score. Why is that? Well, it’s because credit is mostly used as a way to score your reliability to pay back money that you borrowed. Many everyday bills and payments won’t affect your credit unless you neglect them. So, in fact, even before you truly start thinking about using your credit, you’ll need to make sure you’re not doing anything to negatively affect it — which only means paying all of your bills when they are due.
Think of it as a report card. When you’re young and you have no bills and responsibilities, your score card says nothing. Let’s use that same example as before. Let’s say you just got your first apartment. You may have been asked to have a cosigner on your lease. This is because you have no history of good or bad credit. You need someone else’s name to support the idea that you will pay your rent each month. If you don’t, your credit score and your cosigner’s credit score will eventually be affected. There’s usually a grace period for late payments. Commonly, if something is going to affect your credit, you will receive notice before your information is sent to a debt collector. So, you shouldn’t be too worried about it affecting your credit score immediately if you’re late on your payment a day or two, but this is why it’s imperative to understand every transaction that you’re attaching your name to. Vendors will usually be quite explicit about the amount of time you have before your information is reported to a creditor.
That’s the basic idea of credit: you tell someone that you will make a payment on time and then you do it. As you make your payments on time, you have more items to add to your credit history. Mostly this relates to loans that you have taken out for one reason or another, but there are a few exceptions (like the apartment scenario).
Okay, now we all know to read every bit of the fine print in an agreement, right? Great. Always ask if you’re not sure. After all, your name and credit score will be on the line. It’s your right to know how your credit could be affected if you’re a little late on a payment.
Now that we understand that credit is viewed as a report card, let’s talk about exactly what goes on that report card. As we stated before, the vast majority of what is included in your credit report will be related to loans. Your credit report will show all of your current debts and their outstanding balances. A large chunk of your credit score will reflect your ability to pay back those loans on time. Credit agencies and lenders will be also able to see if you’ve applied for a new loan recently and much more. Let’s break down the types of things you’d see on a credit report that will affect your credit history.
Does having debt automatically mean my credit score is bad? Absolutely not. Having debt is really the only way boost your credit score over time. Having debt and making your payments on time is the single most effective way to boost or maintain your credit score. Just because you have a few loans doesn’t mean that your credit score will be negatively affected. Your job is simply to keep track of those loans and pay them off on time.
For example, one person has an auto loan. Another person has a mortgage, auto loan, and an student loans. How has the better credit? It’s all about your payment history. If the person with less loans doesn’t pay on time and the person with more loans does, the person with more loans will undoubtedly have a better credit score. The amount of loans you possess has nothing to do with it.
However, credit agencies and lenders will know how much credit you can realistically handle. When you go to apply for a loan lenders will get your employer information, they’ll find out how much money you make per year, and how long you’ve been with that employer. This will affect the amount of debt you can take on. If you’ve already got three loans and you’re trying for a fourth, the lender will want to make sure that you’re already making payments on time and that you’re yearly salary reflects disposable income to cover the new payments. If they aren’t confident that you can handle the new debt, they won’t give it to you.
Credit repair agencies differ from the three credit report agencies in that Experian, Equifax, and TransUnion simply calculate and report your score. Credit repair agencies work with credit reporters in order to provide you with a fair and accurate reading of your credit. The repair agency will help you find any disputing information, information that is reported multiple times, or out of date information. Now, this isn’t to say that this is common that credit reporters will make mistakes. This service is mainly offered for those who are quickly trying to do improve their credit score. If your credit score is close to where you need it, but you feel that a small piece of information could be holding you back, a credit repair service might be able to get you back on track.
Again, you’ll have access to your credit report and you’ll be able to review it yourself. If you see anything on your report that you don’t agree with, you can contact the agency yourself to clear up any misunderstandings. Of course, you’ll need to provide clear documentation showing that they have made an error. However, many individuals prefer to go through a credit repair agency in order for a professional to facilitate the repair, which may make for a smoother process altogether. This service is by no means required, it’s simply a matter of preference.
With that being said, there are many credit repair scams that you should be aware of. Companies that offer “new credit identity” or something similar are scams. Your credit score will stay with you no matter what. If someone reaches out to you and says they can give you a fresh score or wipe your history clean, that’s simply not true and likely includes identity theft. In addition, companies that offer overnight fixes to your credit score are scams as well. Improving your credit score takes time and hard work, no one can dramatically improve your score quickly.
The absolute best thing that you can do, before making any choices about your credit, is to be informed. The more you know about how your credit score is calculated, what type of debt you have, and what your payment history looks like just means you’ll be able to make smart decisions regarding your credit future. If you know exactly where you may have gone wrong with your credit in the past, you’ll know how you can start working to improve your credit score today.
In the next section, we will move on to what actually makes up a good or bad credit score. Do you know exactly how you got the credit score that you have? You could be making some simple mistakes that are negatively impacting your credit score. In turn, this could harshly impact your ability to take out a loan (such as a car, home, or credit card). Check out our next section to find out exactly what you need to do in order to keep your credit score in good condition.
In our last guide, we went over credit basics. If you haven’t read that article, please go back and read it now. It provides a great foundation for everything you’re going to read here. It explains exactly what credit is, what goes into your credit history, and how credit agencies and lenders view your credit score. Today, we’re going to dive into the world of good and bad credit. This section of the guide will show you through the different stages of credit and what could be affecting your credit score positively or negatively. By the end of this guide you’ll know exactly why it is so important to have a good credit score and how a bad one could be holding you back. In addition, you’ll know the kinds of action that you can begin taking in order to get your credit score where you need it to be.
Have you had an application for a car, credit card, or home loan rejected? Maybe you didn’t know exactly why you couldn’t afford the things that you wanted. Your income is good, but you think your credit might be bad. Credit is a tricky thing and in order to take control over your credit history, you’ll need to understand how it got there in the first place. You’ll need to know exactly how banks, lenders, and credit agencies see your credit score. In addition, we’ll help you understand what could be holding back your score and how to get it exactly where you need it to be.
Three bureaus, mentioned in our last section, use a scale of “bad” to “excellent” in order to grade your credit score. Generally speaking, a score of 300 to 629 is considered bad credit. 630 to 689 is average or fair credit. 690 to 719 is good credit and 720 and up is excellent credit. It’s crucial that you understand this scale of grading and exactly where you fit on it. Even if your credit isn’t where you want it to be, knowing this information and understanding the scale will help you improve and get where you need to be.
Let’s start with bad credit. Anyone can fall into bad credit habits and not find out about them if you aren’t paying close attention. There were some missed credit card payments, you paid your student loan payments late several times, and your car payment is harder to manage than you anticipated. These are all simple examples of everyday hardships that happen to all of us. However, if it goes on for too long, your credit can go downhill quite fast, which means banks will be much less likely to want to approve your application for a new loan. The good news is, if you’re like many millions of Americans in this same exact spot, you can always get your credit score to a more desirable place.
An average or fair credit score is what most Americans are working with. This usually means that you may have had a few late loan payments, but for the most part you try to stay on top of it. It’s possible that you’re making most of your payments on time, but perhaps you’re pretty maxed out. Your credit cards are at or close to their limit and on top of that, you’re got a few more lines of credit to worry about. You’ve got quite some time left on your car payments, credit cards, and student loans. It feels like you’re chipping away very slowly, but you’re doing what you can to be responsible. This isn’t a bad place to be. However, banks may be reluctant to let you borrow more money at this stage. An average credit score isn’t too far from a good score, if you can remain vigilant about your payments.
Good credit can be achieved by those who have started paying off their debts and are maintaining a low balance on their credit cards and other loans. If you make one late payment, it’s not a big deal because the credit agencies can see that you’re really working down the sum of your loans. You’re not dependent on credit cards to get your bills paid on time, but you still use them occasionally (and pay them off quickly) to keep your credit score high. Maybe your car is now paid off or close to paid off and you’re not in a rush to go get a new one. You’re focusing on one or two lines of credit that have your sole attention. You’re in a good place for getting a new loan if you need it — maybe you’re thinking about buying a house! Just make sure, before you dive into any additional debt, that you can manage it just as well as you are now.
Of course, excellent credit is the best place to be if you want to be approved for a new loan. However, it does take some diligence on your part. You’ll need to have credit, but be in complete control of it. This means, you’re making all of your payments on time, but you’re using your loans to your advantage. As with good credit, you’re using your credit card occasionally and paying it off. Maybe you’re even putting a little extra down on your car or student loan payments. Your credit history shows good credit habits over a long period of time. You’re maintaining an excellent level of control over your loans. The key part being, you do need to have loans and/or credit cards. If you decide to pay off all of your loans and continue without them for too long, your credit will start to reflect that of someone with no credit, rather than excellent credit. This is the ideal space for anyone to be in to get approved and pre-approved for whatever is their heart’s desire.
Now that you understand your credit score, you can begin to take a look at things that might want to use your credit. Of course, there are traditional uses of credit like home loans, student loans, credit cards, and auto loans. However, your credit might also be checked in other circumstances, like applying for an apartment, refinancing a loan, or even starting up your own business.
In any case, it’s a good idea to have a grasp on your current credit score as well as mapping a plan for improving it, in case your score isn’t perfect (which is most of us). Once you know where your score is, start working on minimizing any debts that you currently have as quickly as possible and make sure that you make all of your payments on time. These are the two largest factors of an excellent credit score.
When you’re ready to make a large purchase, such as a car or home, you may want to become pre-approved for a certain amount of credit. While this is a great idea so that you know exactly how much money you have to spend, you don’t want to have too many credit checks go through per year. This can negatively impact your credit score over time. Although, if your finances are in order and your credit score is just about where you want it to be, getting pre-approved for a loan is a smart decision. It arms you with the knowledge of knowing exactly how much money you have to spend and may even give you an upfront estimate as to what your potential loan payments might look like. This way, you can start adjusting your finances accordingly to make all of your payments on time.
The number one reason that your credit score could be low is that you are overwhelmed by debt. If your credit cards are maxed out and you feel like you’re forced to make consistent late payments, your credit score is suffering as a result. Don’t be scared. Millions of Americans are in this exact same position. Your main goal should be to rid yourself of all or most of your debt and make your payments on time before you even think about applying for another loan. It’s incredibly easy to feel like you’re drowning in debt after college, owning a few credit cards, a car, and possibly a home. That’s enough to make anyone feel the financial crunch. Yet, there are other factors that you might not be aware of that could be negatively affecting your credit.
Your credit score is not only dependent on the amount of loans and credit that you own, but also how much of them you’re currently using. Credit utilization ratio is a fancy term that assesses whether you’re using a majority of the credit offered to you or not. For example, if you’ve got a credit card with a $1000 limit and you’re using $950, you’ve got a high credit utilization ratio. This can negatively impact your ability to attain new loans. If a lender sees that you’re tapping out your available credit, they tend to believe that you’ve got your hands full and to offer you more credit than you’d realistically be able to pay back would be unwise.
New Loan Applications
In addition, multiple loan applications in one year can also affect your credit score. For example, if you were to apply for an auto loan a few times in one year, all of those applications are reported on your credit history. They are sent over to the credit bureaus and they will be included in your credit score. Now, one agency may see all of those applications and decide to score your credit according to one application and the other two may decide to use each application individually. This is where credit repair comes in.
If you take a look at your credit report and see multiple instances of the same issue, you are entitled to ask for consolidation on your credit report. By doing so, you may see an improvement to your overall credit score. It is your right to contact the agency yourself and ask for the fix. However, many individuals prefer to go through a credit repair agency that can do the hard work for them. The other benefit to using a credit repair agency, other than the fact that they are professionals, is that they may see mistakes that you would have otherwise missed. They are well versed in the world of credit and they know exactly what items should be included and excluded from an excellent credit report. They will be able to provide you with clear, sound advice towards improving your credit score.
Remember that this service costs money for the hours that these professionals will put in towards fixing any potential mistakes on your credit report. However, these agencies should not offer you an overnight boost in your credit score. Even if a mistake is fixed, you may not see a dramatic change in your credit. It all depends on your situation. In most cases, repairing your credit takes time and dedication. Beware of scam artists that offer “new credit identities” or quickly boosting your credit score by any other means. It may involve identity theft and it just plain won’t work.
Anyone can succumb to bad credit, possibly without even knowing it. Simple mistakes with applications, loans, and even bureau problems with your report can equate to an unappealing credit score. Fixing your credit can seem extremely overwhelming, but it absolutely can be done with or without the help of credit repair services. Working on whittling down your total amount of debt and making all of your loan payments on time is the best possible choice you can make for your credit. With a little bit of hard work and possibly some guidance and assistance, you can get your score exactly where you want it to be.
In our next guide, we’re going to be diving into the world of credit repair. We’ll give you detailed, step by step information about exactly what you need to know in order to boost your credit as efficiently as possible. You’ll be able to make a credit repair plan, stick to it, and watch your credit score improve over time. You’ll also be confident about whether or not you could benefit from a professional credit repair service and understand specifically what they can do for your credit score (that maybe you can’t do for yourself).
At this point in our series you should understand what credit is, what it is used for, how to view and understand your credit report, and the types of behaviors that might be hurting your credit. You should also be aware of how banks, lenders, and credit agencies see and judge your credit history. In addition, hopefully you have an idea as to what your credit rating is: bad, fair, good, or excellent. If any of those topics sounds unfamiliar, stop right now and go back to the beginning of our guide.
In this section, we’re going to be talking all about what to do if you have bad credit, little to no credit, or if you just want to give yourself a nice boost before you apply for a loan. If you’re confused as to what specifics are holding you back or you feel like you’ve got it under control, but your credit score is still just not where you want it to be, we can help. We’ll give you all the tools necessary to make a strategic credit repair plan, and reap the benefits of an improved score.
You may have heard in our other guides within this series that making your payments on time is essential to fixing bad credit. This is very true, but there is much more to repairing credit than simply making your payments on time. Last time, we discussed how debt, credit utilization, new loan applications, and credit reporting errors can all affect your credit score as well. Let’s specifically talk about how you can go about fixing problems with debt, credit utilization, and new loan applications (we’ll get to credit report errors a little bit later).
Fixing Debt Mistakes
Many Americans feel as if they’re drowning in debt from credit cards, car loans, student loans, and more. However, sometimes these types of debts can be unavoidable. They may even be necessary in order to live a comfortable life. So, why are credit agencies judging us so harshly for having debt? Well, it’s not necessarily the act of having debt that needs to be resolved. The negative labels are much more related to being overwhelmed by debt. Having all of the above loans is just fine, but you shouldn’t feel financially suffocated by debt, struggling to make payments on all your lines of credit, loans, or other debts.
So, if you’re feeling stressed out by the amount of debt you have, a good goal for your credit plan would be to start chipping away at your current debt before you think about applying for any new loans. This doesn’t mean that you have to completely eliminate all of your debt, but instead just make it more manageable for you — that should be your goal. In fact, credit agencies and banks prefer when you have some lines of credit open. When you’re consistently paying off debts, your score is improving. If you have no debt, nothing is happening to develop your credit history, and by extension your credit score. Banks and lenders want you to have a good credit score before they lend to you. If your credit score is bad and you don’t ever work on repairing your credit, you won’t qualify for one of their loans.
Lowering Your Balance
This brings us to the next point: credit utilization. This ties in perfectly with the amount of debt you have. One of the first things you’ll want to examine in order to fix bad credit is how much of your available loans you’re currently using. We already discussed that maxing out your credit cards will make banks feel like you’re taking on too much compared to how much you can likely repay on time. This means that your first step should be to chip away at the debts that are the hardest for you right now. If your credit card seems like it just keeps reaching its limit and your car payment is almost breaking your budget, these are the things you need to make a priority in your credit repair plan. Addressing the loan payments that are often late or the credits that are reached, paid off, and then reached again each month should be at the forefront of your focus.
Of course, this doesn’t mean that you should neglect any other loan payments, this just means it might be a good idea to reevaluate your budget and shift funds so that your most difficult loan payments are now the ones that you pay first. If you feel like your budget just won’t stretch that far, it’s time to get in contact with your lender and see if they can push back your payment, hold off on payments for the time being, or offer you other options while you start to fix your credit.
When to Take on New Debt
Once you start to make progress on your credit repair, you might think that you’re ready for some new loans. However, we urge you to hold off. As we mentioned before, frequent credit checks and applications can actually have a negative impact on your credit. You could be doing more damage right after you started to make progress. We encourage you to utilize your one free check from each credit agency if you’re anxious to know if you’ve managed to fix your bad credit.
You’ve started to chip away at what was until recently overwhelming debt. So, it seems like you could maybe handle more, and that your credit score must have improved. However, that is most likely not the case. Lenders want to know that you have good financial habits. This means, the longer that you maintain good habits, the better your score will be. If you feel like you’ve finally gotten a handle on your current debts, that’s great! You should stick with that for a while and enjoy the fact that you’re effectively repairing your credit. Remember, your credit report shows a history of your credit. Most actions will stay on your credit report for years before they drop off (usually seven to ten years). You want that entire span to reflect strong, responsible spending and payments.
We talked about the three companies that compile our credit reports and calculate our credit scores, Experian, TransUnion, and Equifax. It’s the sole job of each of these bureaus to accurately score every individual in the country. Their job includes collecting information on every single person by reaching out to banks, credit unions, card companies, and private and government-backed lenders. Once they have done so, they are responsible for filing it correctly into your report, keeping it up to date, and making it available to those who have inquiries about it. With that being said, mistakes happen. Information can be filed incorrectly or multiple times, numbers might not exactly match up, or it might simply be out of date. These are just a few examples of the things that could possibly show up on your report.
As such, credit repair companies are popular due to their experience with credit reports and filing disputes. To the untrained eye, a credit report is confusing and cluttered; you might not know what to look for or where to look. In addition, getting a mistake fixed on your report can take persistence. Often times, it takes time to find small mistakes in a large report. Before it can be fixed, you must find proof to back up the argument and take the necessary time to follow through on the correction with the bureau. It’s a lengthy process that absolutely can be done by yourself, but in many cases it might be easier on you, and more accurate for your report, to use a professional.
Taking the Good with the Bad
The other side of repairing credit is being able to examine your actual credit report and credit history. Let’s say you’re the average human who has made quite a few mistakes in their financial past. Maybe you have felt overwhelmed by debt, you’ve made several late payments on loans, and you’ve tried to accrue more loans in order to relieve some of the stress. Information from each of these areas will be provided to the three credit bureaus, but here’s where it can become a bit messy. You may find that your credit report isn’t telling the entire story of your credit history. For example, you may see issues with late payments or accounts being sent to collections, which is accurate for your history. However, credit reports should also include good things, not just mistakes. This means, if you resolved these issues swiftly, that should also be included in the report. Debts that get sent to collections can often be reported in duplicate across your credit report; that can quickly compound the negative impact of a single debt, and you should get that fixed immediately.
Be on Alert if You’re a Victim of Stolen Identity
Remember how we talked about identity theft? Well, it’s not only credit repair scammers trying to steal an identity from you; sometimes the individuals who have had their identity stolen may see false information included in their report. If you see any information that doesn’t seem familiar to you, it’s a good idea to do some research. Check with your bank or lender to find factual information that proves the item or charge on your report is false. Then you can decide if you want to take that to a professional that might be able to dig a bit further or go straight to the bureau.
Your Mistakes Shouldn’t Stay With You Forever
We also talked about information staying on your report for seven years. This refers to information that negatively impacts your credit. Good reports may stay on your history for longer. However, in some cases, bad credit mistakes may still be showing on your report if the agency has failed to remove it. Again, it’s a good idea to see when the item was reported and check your records to make sure that it aligns correctly. If you find something that should have dropped off, keep the evidence and take it to your credit repair service or directly to the bureau.
Consistency both in your actions and your credit report is what translates to a good credit score. Start with addressing your debt, then making your debt more manageable, and finally paying off that debt on time for the duration of the loan. A good, long history of responsibility is what credit bureaus and lenders need to see in order to fix a bad credit report. In addition, it pays to be meticulous about your credit report. You have the right to a fair and accurate credit report. So, if a few mistakes on your report are potentially making a huge, negative impact on your score, you have the right to dispute this information.
In the next guide in our series, we’re going to walk you through the timeline of credit repair. How long should it realistically take before you start to see a positive improvement in your bad credit? What happens if you’re thinking about applying for a very important loan soon? Are you going to have your credit in shape before your deadline comes? We’ll get into quick fixes versus long term improvements to your credit report and how each of them individually can make an impact on your overall score.
In our last guide, we went in depth about what types of things are bringing down your credit score. There are things we mentioned that you might not even know are dropping your overall credit rating. If you’re not sure exactly what is affecting your credit, go back and read our insight on who needs credit repair.
Now, we’re going to start talking about setting things in positive motion. Many people will ask, “What actions can I start with today that will affect my credit immediately?” We’ll explain about how long you can expect it to take for different repair and rebuilding actions to reflect on your credit score. In addition, we’re going to set you up with some long term good credit habits, and show you how to counteract things like overwhelming debt and identity theft.
You’ve decided that you need a boost to your credit. Most likely it’s because you’re looking to apply for another loan soon and you’re ready to take the next financial step towards buying a home, car, or starting a small business. Your credit score isn’t quite where you want it to be and you need it to improve quickly because you’re on a deadline. There are some effective things that you can do to attempt to improve your score when you’re sticking to a timeline. In addition, it’s a smart idea to start working on good long term habits that will stay on your credit report for years. Working on long term goals will give you a higher credit score over time and will create a strong foundation for all of your other financial choices to rest on.
Cleaning Up Outstanding Balances
You might already know what types of things are keeping your credit score down. Let’s look at those first. For example, if you have outstanding balances that have been sent to collections, but you just haven’t gotten around to taking care of them (we’re all busy people), you probably know that your credit score is suffering as a result. In that case, you should go through your finances and examine any areas that you can remedy immediately. Any overdue bills, unpaid balances, or creditors that have been hassling you should be addressed as soon as possible. Tying up any loose ends can potentially impact your credit score in a big way.
Showing Your Progress to Credit Agencies
That leads us to the next point. If you have cleared up a few obvious negative items that were holding you back, you can now present this information to the credit bureaus for review. It is the job of creditors, banks, and other lenders to present the bureaus this information. Yet, it doesn’t always happen this way. Some information is updated on your credit report right away and other instances might take a month or so to go through. If you haven’t had your one yearly free credit check yet, we’d suggest you wait about a month (or more if you can) after your changes were made to do a credit check. If you still aren’t seeing the information reflected correctly, it’s time to contact the bureau directly.
Reporting Errors to the Bureaus
One of the other things we talked about last time was fixing errors on your report. Duplicate items, typos, outdated information, old debts that never got removed after the account was paid off — these kinds of errors are surprisingly common, and can hurt an otherwise perfect credit score. If you feel that you have a glaring error that is holding back your score, you can go directly to the bureau with proof to get that resolved right away. As long as you have time to find evidence to back up your claim and take the item to the credit agency, you could see a boost in your score. However, you should be aware that the process will most likely differ depending on what you’re disputing. It could be anything ranging from a small to a large mistake and could involve any number of topics included in your credit report. Some fixes might go right through, while others might be more challenging. Just make sure that you’re armed with as much knowledge and proof as possible and you’re willing to stick with it.
Going With a Credit Repair Agency
On the other hand, hiring a credit repair agency might be an easier option for you. Doing so takes the stress off of you regarding all of the leg work required to make the change. However, it’s the job of a credit repair agency to fix credit report mistakes, so it’s possible that they may find several mistakes that you could have missed on your report. This means that you might have a few small mistakes that can be quickly fixed, but maybe there are also larger ones as well. The point is, if you’re on a deadline and your credit repair agency has a plan to maximize your score, it might take time — time that you don’t have. So, you should be upfront with them about your plans, your preferred timeline, and your overall goals from the interaction. They will let you know how likely it is that you’ll see a change in your score in a short period of time.
How Long Will it Take?
As a rule of thumb, a credit bureau has 30 days from the date that they receive your dispute to address it. They must do an investigation to show if the dispute has any merit. They’ll take a look at your report, examine your history, and review the proof that you sent over to them. They will then get back to you within 30 days letting you know what their conclusion is about your claim. If they warrant a change to your credit report they will notify you within five days after completing their investigation. Now, here is the tricky part: there is no standard for how long an investigation should take. As we said, many smaller issues may be addressed and resolved quickly, while others might take longer to investigate. Yet, if they do decide to alter your report, they will let you know within those five days and they will give you an additional free viewing of your improved report.
How Long is “Long Term”?
Solid long term habits are, of course, a necessity to maintaining a high credit score. Even if you see a boost in your credit due to some quick fixes, it might go right back down if you’re taking on too much debt and still maxing out your credit cards. You might be wondering, “I’ve been working on my credit for a while now. When will I see results?” Good question. How long term is “long term”? Well, that all depends on your individual situation. Each credit report is different from the next. One person might have late payments that are reflecting on their credit and someone else might have a maxed out credit card that is holding them back. Each of these scenarios requires a different level of attention in order to fix the problem.
Depending on the severity of the situation and the level of your dramatic action to resolve it, you could be looking at six months or less to see a change. Often times, if you’re trying to get pre-approved for a home loan or something similar, your lender will tell you to work on your credit for about six months, then possibly get back in touch with them. However, the longer that you have, the better.
What Areas of My Credit Should I Focus On?
What kinds of changes are we talking about? Some of them we have discussed already, but let’s get an actual breakdown of the absolute most important areas of your credit that need to be fixed long term. Credit bureaus use a system that is basically broken down like this:
This means that the two most important things to work on are making your payments on time, and chipping away at the debt you currently have. As we mentioned, credit mistakes like missed payments can stay on your report for seven years. This means, if you’re like most of us, you’ve got a bunch of those mistakes to try and counteract. If you’re doing your best to get your score up quickly, but the results just aren’t coming, it’s possible that it just might not be in the cards right now. Working on getting your credit together for a couple years will have a much larger impact than three to six months.
How to Deal With Identity Theft
What’s more, identity theft can be extremely damaging to a credit score. Identity thieves do everything they can to get your personal information. If they’re lucky enough to get ahold of your social security number, then they’re able to open up lines of credit in your name. This means you could have loans or credit cards taken out in your name that were never paid off. Resolving these issues usually takes time. You know that the account isn’t yours, but the bank and credit agencies need proof that backs up what you’re saying.
You can put a credit freeze on your credit report for 90 days if you suspect fraud, which will stop lenders and creditors from checking your score, which can negatively affect your credit score as well. This will make it harder for any thieves to open new accounts in your name. In addition, if you have some proof of the fraud, you can put a fraud alert on your account which lasts for seven years and does not impact your credit score.
Cleaning up a fraudulent mess can take some time. Each issue on your report will need to be addressed individually, especially if they are from multiple banks, lenders, and credit card companies. Don’t despair! It’s not hopeless. It just takes perseverance and dedication to your cause. In the meantime you can still work on your own good spending habits in order to improve your score, which could help you if you need to be approved for a loan relatively quickly. This is another case where having the attention and resources of a professional credit repair company can help. The thoroughness and understanding of the disputing process offered by credit repair professionals can be a powerful aid following identify theft.
How Can I Consolidate My Debts?
Another long term fix includes debt consolidation. If you’re struggling to keep track of all your loan payments and you’re not completely sure which charge is coming from where, it might be time to think about consolidating your debts. Let’s create a scenario in which you have five payments that are overdue. Each of those payments has been sent to creditors who are now reporting the overdue status of your payment to the credit bureaus. Now, you’ve got five different negative items on your credit report, which is obviously not ideal. So, what you can do is work with a debt consolidation agency to work all five payments into one. This way, you’re seeing one report on your credit and not five.
You’re still going to have to pay off that debt over time in order to make a huge impact to your credit score, but you won’t be slammed with five times the negative information if you happen to be late on another payment. There are a couple ways to do this. Some companies will offer you refinancing options, which involve taking out a new loan to pay off all of your debts and consolidate the charges into one loan. The only downside to this is the fact that you have to take out another line of credit, which will be reported on your credit history. Other companies will simply act as the middleman for you. You will pay them a lump sum each month and they will pay all of your bills for you. In any case, your credit report will only reflect the debts as if they were one loan.
Next, we’re going to discuss specific instances in which it would be beneficial to reach out to a professional credit repair service instead of doing it yourself. We’ll break down in further detail exactly what credit repair agencies can do for you and how long it could take. Although there is a lot of information out there, credit repair professionals are trained and skilled at fixing errors and helping you meet your credit goals. We’ll talk about why you shouldn’t be afraid to seek their expertise.
In the last section, we talked about the logistics of credit repair. You should now know about how long credit repair should realistically take you and what the components of effective credit repair are. You might have even taken a look at your own credit history and have an idea of how manageable your credit repair seems without a credit repair company. In our last portion of this guide, we’re going to discuss what kind of a ride you might be in for if you choose to do your own credit repair. You’ll know exactly how credit repair agencies might be able to help you, what rules and regulations they operate under, and what kinds of results you can expect.
In truth, your credit report is the same no matter whether you, a lender, or a credit repair company is looking at it. Likewise, you are perfectly able to go through your history, write to the rating agencies, and coordinate with lenders or credit card companies to set the record straight and get your credit score back where it belongs. However, that can be a long, difficult, time-consuming process. Just as you can self-represent in court, you can fix your credit on your own, but you’ll get better results faster if you work with the pros.
First, we want to explain exactly what a credit repair agency isn’t. We’ve talked a bit about the fact that scam companies often operate in the realm of “credit repair,” but let’s go a little bit deeper than that. Legitimate credit repair agencies are regulated by the Credit Repair Organizations Act. This means that there are a lot of rules and regulations specifying what they can and can’t do for you.
We think it’s important to “de-mystify” the world of credit and credit repair before we dive into what credit agencies might be capable of accomplishing for you. You’ll need to have trust that a company can do what you need them to do and not send you further in the wrong direction. Now, that you understand what a legitimate credit repair company’s rules and regulations are, let’s dive into exactly why they could be beneficial to use instead of handling it yourself.
In all honesty, a credit repair agency doesn’t see anything differently on your credit report than you do. They don’t have special access to unique, more classified information. Although, they do know exactly what they should be looking for. They’ve seen mistakes on credit reports, duplicate items, and they know which negative credit items need immediate attention.
In addition, they’ll encourage you to take a look at your own free credit report and see what areas might be lacking. After you do so, you can sit down with your credit repair agency and start to form a plan for fixing your credit score. For example, you might already know that you’ve got some late payment issues that you need to deal with. You already know that late payments make up a large percentage of your credit history and credit score. You can express this fact to your credit repair agency and devise a plan to consolidate your debts or coordinate with lenders to make your payments more manageable.
Looking at late payments, your total debts, and knowing where to start is intimidating. Even though you know that late payments is an issue for you, where do you begin? Which payments do you focus on first? What if you don’t have enough money to pay them all off right now? Don’t fret! The credit repair agency will sit down with you and discuss all of the late payment issues affecting your credit score. They’ll be able to tell you exactly which payments are having the largest effect on your score, then you can form a plan of action and begin to remedy the largest areas of concern first.
The fact of the matter is, credit repair agencies are professionals, and the rest of us aren’t. They are trained with years of experience in credit repair. Knowing who to talk to, when to talk to them, and what process to use can be quite confusing and laborious when dealing directly with credit bureaus. Not to mention, the repair company will commonly tie up all loose ends for you. That doesn’t just stop at fixing errors on your credit report, they may coordinate with lenders, debt collectors, and credit card companies in order to clear your name and improve your score.
This comes in particularly handy if you happen to be the victim of identity theft. If you’re one of the millions of individuals who have had their social security number stolen or their credit card information leaked, you could be in a tough situation that seems impossible to recover from. Many credit repair services offer identity theft repair services that can help turn around an awful situation much faster than you might be able to do so yourself.
This is nothing short of a marathon process that requires coordinating information from multiple angles at once. Many individuals aren’t able to catch identity theft in its stages of infancy, which means you may already have several loans, credit cards, and fraudulent accounts opened in your name. The credit repair agency has to work with you, each individual bank or lender to resolve the issue, and report that information quickly and accurately to all of the credit bureaus for revision on your credit report. This also entails gathering evidence to prove that the accounts and individual purchases on them are fraudulent and reporting all of that intel back to the lenders and credit bureaus as well.
Another scenario that many Americans find themselves in, involves mixing personal finances with business. Is your credit score suffering due to a mess of business loans? Maybe a startup that didn’t quite launch as you expected? Many individuals choose to take out business loans in their own name instead of a business account, which isn’t a horrible idea in the beginning, but it can have some nasty repercussions if things happen to go south. Think of it this way: your credit score is now dependent not only on your own financial habits, but the habits of your entire business. Small business owners might not even know that their credit score is suffering until it’s too late. This is where professional credit repair comes in.
Of course, each experience will differ depending on your credit scenario. In general, with a professional service you can expect an overall smoother, faster, and cleaner route to credit repair than if you were to try and manage it all yourself. You can expect credit repair agencies to find minute details that you may have overlooked on your own. This is especially helpful for those of us who are really trying to get that extra boost out of our credit score. This could bump you right up to where you need to be in order to qualify for the loan you’ve been eyeing.
If you decide to go with a credit repair agency, they’ll set down a guideline for how long it should take and what kind of realistic goals you should expect before you ever get started. Exceptions may occur and you’ll need to be prepared for the plan to change a bit if unexpected things come up, but for the most part you’ll know what’s in store and what is expected of you. This is another reason we suggest simply talking to a professional about your credit. You’ll know what kind of challenges you might be up against before you really get the ball rolling. You’ll know if rebuilding your credit sounds like a feasible thing to do on your own or if a professional can help you get where you need to be, faster.
In addition, with a credit repair agency, you can set a tangible goal according to your financial plans. For example, if you’d like to buy a home in three to six months, you’ll know if that’s a realistic goal after speaking with the credit repair company. If you know that you’ve got some major mistakes to deal with, your agency might tell you that one to two years might be a more realistic goal before you will qualify for your dream home.
It’s not something that you can’t do, it’s just something that is incredibly time consuming. and to the untrained individual, it could turn into a much lengthier and more complex situation than it needs to be. If you’ve taken a look at your credit report and you’re confident that you can resolve some of the major issues somewhat quickly and easily, go ahead and do it yourself. However, if you’re like many of us that have quite a lengthy history and don’t want to trudge down that deep, dark hole that is our credit history, it might be a smart idea to leave it to the professionals.
We hope you’ve enjoyed this in-depth look at credit scores, credit history, and credit repair. If you’re unsure about any aspect of the aforementioned, please go back and read our other installments in this series. Our goal is to help you make your own informed decisions about your financial well being. No matter where you are on the credit score spectrum, you’ll likely benefit from credit repair. Jumpstarting a credit repair plan isn’t easy, but you now have the tools to read your credit report, address your credit history, and repair your credit score.