When you don’t have a good credit score, you have a higher chance of rejection for loans, renting a house, and interest rates. If you have a bad credit score, you must improve your credit score.
When you want to improve your scores, you must hire a legitimate credit repair service. There are many bad credit repair services, and this article will help you recognize them.
Signs of Bad Credit Repair Service
We have listed a few warning signs of a bad credit repair service.
Mortgage services focus on homebuyers who are going to close their loan. They will misguide you to lose your money. They will not make any legitimate conversations regarding the mortgage loans. Such mortgage services will not allow you to contact any of the three major credit bureaus. (Experian, Equifax, and TransUnion)
Money Transfer Services
The money transfer service is a type of identity theft. In this case, the repair service helps you to transfer your money through a gateway. This might create the possibility of unauthorized access to your money. The blame for this falls on the repair service. The bottom line is the loss of your money.
They also pressure you into accepting the deal now, else they will cancel the process. This will not make the consumer think about using their service.
Another sort of identity theft, they make you replace your Employee Identification Number (EIN) with your Social Security Number.
Debt related Services
When you hire a bad credit repair service for handling debts, it will be a riskier process and will lead you into more debt. They will make a promise to settle down your debt, or make some change of terms in your debt to the creditor or debt collector.
Clearing accurate information
The credit repair service will make a commitment that they clear all the inaccurate information from your credit report. They will also give assurance of clearing the accurate information on your credit report.
If they clear any of the accurate information, then it will damage your credit scores and history.
Asking for up-front Charges
The bad credit repair service will ask you to pay before they start a service. This is in direct violation of the Credit Repair Organization Act’s (CROA) standards.
According to CROA rules, the credit repair service should charge the consumer only when they complete the process or if you find any improvement on your credit scores.
No Explanation on Legal Rights
The bad credit repair services will not allow you to contact the three major credit bureaus. These services will not explain the rights that the consumers should know.
One of the rights is, according to the Federal Trade Commission, you can repair your credit by yourself.
Are bad credit repair services common?
When you want to build your credit score, you may hire a credit repair service to help you because they help in building your credit by clearing negative items from your credit report.
A legitimate credit repair company will guide you to handle your credit account and avoid damaging your credit. In the case of a bad credit repair service, they mislead you to provide incorrect information to repair your credit.
These services want to improve your credit, but not in a proper way. They direct you in the wrong way and damage your credit.
What to do if a bad credit repair service damages my credit?
If a bad credit repair service promises you to remove disputes from your credit report and improve your credit and fail to do that, then you need to take action against them.
Here are some tips you follow to clear your credit report.
Contact the Creditor
The first step is to contact the creditor and inquire about the incorrect information on your credit report. Get the details and order them to remove the negative items from your credit report by contacting the three major credit bureaus.
After this, you will get a letter from the creditor accepting that the provided information is wrong and should be deleted from the credit report. Then share the copy of that letter to the bad credit repair service that made the incorrect report.
File Another Dispute
After you contact the creditor, file another new dispute with related information with the three credit bureaus.
When you submit the same dispute information to the bureaus, this will not be useful for them to proceed with the process.
You need to contact the credit reporting bureaus directly when you don’t find any help with the credit repair services.
Make a Complaint on the Creditor
When you find an issue with the creditor, then you should make the credit bureaus know about that creditor. If the reporting agencies (credit bureaus) help you with some changes on the credit report but provide the same information again, then you can contact the Federal Trade Commission.
When you are confused about choosing an agency, it is best to go with Federal Trade Commission. They will guide to with the appropriate agency. When there are a required number of complaints or proofs of corruption, the FTC will take legal action.
State Attorney General
In some states, you must file this issue to the state attorney general or consumer protection agency. They will have state laws to protect the information to the credit reporting agencies.
Add Explanatory Statement
After a bad credit repair service damages your credit, you must file a dispute with the credit reporting agencies. While filing for a new dispute with new information, make sure you add an explanatory statement to it.
Explanatory statements are included in the credit report because the agency should know why the disputes have not been cleared yet.
Consult a Lawyer
You must talk to a lawyer before fixing your credit reports. They will help you with your legal rights and policies regarding credit reporting agencies. If a creditor or a credit reporting agency breaches the Fair Credit Report Agencies Act (FCRA), then you need to get help from a lawyer.
When you hire a bad credit repair service and get your score damaged, then you need to start it from the beginning, but lenders will have a negative impression of your account since your credit report got damaged.
When you want to hire a credit repair company, look if they follow all the CROA standards and that they are not charging any up-front fees before starting their services.
Frequently Asked Questions
1. Should I use a credit repair service?
Credit repair services help you build your credit by clearing all the negative items from your credit report. They will contact the credit bureaus on your behalf, so there is no need for you to go behind them.
2. Why do you need to fix your credit?
Your credit score speaks when you apply for mortgage loans, auto loans, or any personal loans. If your credit is good, then the lenders will feel more confident in lending you money. So you need to fix your credit.
3. Is a credit repair service free?
No, the credit repair service is not free, but some services provide a free consultation. The charge for repairing your credit is $69-$149, and it depends on the company and service you choose.