Credit Repair Companies: How Do They Work?

Most people have experienced some trouble with their credit at some point in life. Maybe you did too, missing a payment or two, or perhaps there are errors on your credit report that need to be fixed. If you’ve encountered this, then you may need to hire a credit repair company to help you out. This blog post will list how credit repair companies work and what they can do for you.

Review your report

Most credit repair companies will start by pulling your credit report from the three major credit bureaus: Experian, TransUnion, and Equifax. They will then review your report for any errors or negative items dragging down your score. Errors include:

  • Late payments that have been paid on time.
  • Incorrect information about your balances or credit limit.
  • Wrong personal information.

Negative items include collections, charge-offs, bankruptcies, and foreclosures. Once the credit repair company has found all of the errors and negative things on your report, they will contact the credit bureau on your behalf and dispute the errors.

There are instances wherein you may be able to review your credit report through an app. When you research online, you may come across MoneyLion loans app that can help you with this. Using this app, you can get your credit score for free and track any changes in your credit score. Otherwise, you can try to check the credit bureau’s website and dispute the errors yourself. However, this can be time-consuming and may not be as effective as using a credit repair company. This is because credit repair companies have relationships with the credit bureaus and know how to dispute the items on your behalf effectively.

Develop a plan

After the credit repair company has reviewed your report, they will develop an action plan. This plan will outline the steps that need to be taken to improve your credit score. It will also list the estimated time frame for each step. The plan may include paying off collections, disputing errors, and negotiating with creditors. Once the plan is in place, the credit repair company will work on your behalf to improve your credit score.

Negotiate with creditors

For any late payments or collections on your credit report, the credit repair company will try to reach your creditors and negotiate with them to have these removed. They will also work with you to devise a plan to make sure you can make all of your future payments on time. For instance, they can help you set up a payment plan or work out a settlement. A payment plan will help you catch up on your late fees and avoid further damage to your credit score. Meanwhile, if you decide to work out a settlement, you will need to pay the debt in full, but your credit report will show that the debt has been settled. This can still have a positive impact on your credit score.

Remove negative items

If the credit repair company successfully removes the errors on your report, your score will go up. This means that you will already be able to enjoy the benefits of having a good credit score, such as lower interest rates, better credit products, and more. However, if there are negative items on your report that cannot be removed, the credit repair company will work with you to improve your payment history. This may include making on-time payments, keeping balances low, and using credit wisely. They will also try negotiating with the credit bureau to remove the negative item. This is done by showing proof that the item is inaccurate or proving that you have taken steps to improve your credit.

Monitor your progress

After the credit repair company has finished working on your behalf, they will monitor your progress to ensure that the items on your report are accurate and that your score is improving. They will also keep an eye on your account to ensure that you make all of your payments on time. If they find that you are not making progress, they will contact you to discuss what steps need to be taken. For instance, you may need to hire a credit counseling service to help you get your finances back on track. Nevertheless, if you have any questions or concerns, you can contact the credit repair company, and they will be happy to help. Usually, credit repair companies offer a money-back guarantee if they cannot improve your credit score.

Credit repair companies are a great way to improve your credit score. They will review your report for errors, negotiate with creditors, and remove negative items from your report. They will also monitor your progress to ensure that you are on the right track. Just make sure that you are working with a reputable credit repair company. Otherwise, you could end up worse off than you were before.