Should You Pay Someone to Help Fix Your Credit Problems?
Everyone knows it’s important to have good credit. A good credit score means more borrowing options provided to you at a better rate and lower insurance premiums, in addition to plenty of other important benefits. If you’re dealing with a bad credit history, you can be turned down for credit cards, an apartment, or even a car loan. If that’s you, it’s time to do something about it. But what exactly can you do? Most of the time you can actually fix your credit all by yourself – you just need to know what to do. Here’s a look at how you can take matters into your own hands and fix your credit history.
1. Your credit report has inaccuracies.
According to Nerd Wallet, your first step needs to be accessing your free annual credit reports from three different bureaus – Equifax, Experian and TransUnion. Just go to Annual Credit Report, enter your personal information and answer a few verification questions. Once you’ve got your credit reports in hand, closely look them over, keeping an eye out for any errors. (So far, so good, right? This doesn’t require professional help.)
A 2012 study by the FTC states that 26 percent of credit reports contain errors, and 13 percent of credit reports contain errors that hurt credit scores. If you are part of the 13 percent and find a discrepancy, gather whatever proof you can to prove the errors are incorrect. “Make copies of this proof and send them to the various reporting bureaus with a written explanation of your claim. This explanation should include your name and address, a statement on which items are inaccurate, and the reasons why they are inaccurate,” according to Nerd Wallet.
The credit reporting bureau must investigate within thirty days, writes ABC News. Wait thirty days, and then follow up, making sure the inaccurate items are gone. From there, make sure you regularly look at your credit report to ensure it remains error-free. Should you use a professional to help you? MSN Money says no. Taking the above steps are the only real ways to influence a credit history, meaning a pro can’t do anything differently than you (other than take some of your money).
2. You want to repair your credit history.
This is for those of you who have struggled with credit issues and are now paying for it with a bad credit report. Despite advertisements you may see saying, “We can erase your bad credit,” it’s simply not the case, and you should be weary of any company you see advertising this – there are a lot of scams out there. Indeed, attorneys at the Federal Trade Commission, the nation’s consumer protection agency, say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness.
“You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan,” according to the FTC. If you’re in a situation where bad credit is coming back to haunt you, take matters into your own hands by building up your credit. A first step? Get a secured credit card, which is a great way to buy credit, according to The Guardian. Here’s how it works: In order to get a secured credit card, you’re required to put down a deposit that acts as your credit limit. It’s a safe way to repair credit because your charges are fully secured by the deposit.
Keep in mind, though, that you only want a secured credit card that reports to the credit bureau. That’s how your activity will count toward building or repairing your credit. There are many banks that offer secured credit cards, including Bank of America, US Bank, and Wells Fargo. Another option is to piggybank on someone else’s credit by having them add you as an authorized user on an existing card, per The Guardian.
Don’t just piggyback with anyone, though. If they aren’t paying off their card and are putting too much on it, those scores will temporarily reflect on your credit score. If there are a few poor marks on your credit history (that are accurate), just know that most negative items will drop off your report in seven to ten years, writes Life Hacker. In the meantime, be diligent about building up your credit.
3. You’d still prefer professional help.
Before you take this step, know exactly what you are paying for. It’s easy to want to seek out professional help when you’re dealing with a problem, and when you’re staring at a bad credit report, the idea of having someone fix it for you seems like a great option. But, often when it comes to credit repair companies, you’re paying a lot of money for something that’s basically a gamble, according to Credit. When it comes to credit repair, the main goal is to raise your credit score.
Credit repair companies will try to accomplish that by challenging everything in your credit report that could be dragging down your scores, whether it’s accurate or not, writes Credit. Their approach is to typically mail letters to the credit reporting agencies, asking them to investigate the items they’d like removed. A credit reporting agency must then investigate that item (they’re required to by law). After that, it’s a waiting game. The creditor or company may or may not respond to the dispute. If they don’t, that item will no longer be reported.
There are no secret tricks to this. It’s just a matter of being persistent and sending out letters to credit agencies. Credit writes, “I want to make sure you understand this point if you are thinking about hiring a credit repair company. If you are contemplating credit repair, ask them, ‘Exactly what do you do for me?’ If they tell you that they will dispute information then ask them how they will do that. Drill down deep enough and you’ll probably find that they will send letters to the agencies requesting that negative information be verified. You may wind up paying someone hundreds, or thousands, of dollars just to send form letters for you.” The bottom line: When it comes to your credit report and history, you’re capable of dealing with it just as well as any professional.
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