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A high credit score can be the golden ticket when it comes to competitive rates and terms for a range of financial products. If you find yourself in a precarious financial spot with damaged credit, the credit repair process could be a way to turn it around.
But credit repair is not a fix-all for every type of consumer. Before diving into the credit repair space consider both the benefits and drawbacks.
- It’s not possible to pay to get your credit report expunged.
- Anything a credit repair company can do, you can also do.
- If you don’t have time, a credit repair company may be useful.
- Not all companies are legitimate, so be diligent about researching companies.
Benefits and risks of credit repair
Benefits of credit repair
- May be faster than handling on your own.
- Can help find what’s causing a dip in your score.
- Potential to raise your credit score.
Risks of credit repair
- No guarantee your credit score will go up.
- Potentially hefty fees.
- Not all companies are legitimate.
Pros of credit repair
Although there are risks that are associated with working with a credit repair company, there still are benefits as long as the one you work with is legitimate.
May be faster than handling on your own
Without the help of a professional company you will have to request reports from the three main bureaus on your own and review each. Even though most credit disputes tend to be completed within 14 days of reporting, it can take a while to identify and flag potential issues. Working with a credit repair company can expedite the process.
Can help find what’s causing a dip in your score
Understanding your credit reports can be overwhelming and a challenge to decipher. When working with a credit repair company you will be able to rely on trained professionals to determine where any issues lie.
Potential to raise your credit score
Repairing your credit provides you with some financial peace of mind and can help you in the future. With an improved credit score under your belt, you will benefit from better rates and improve your access to credit.
Cons of credit repair
If something sounds too good to be true, it likely is. Consider this mantra when exploring the downsides of working with a credit repair company.
No guarantee your credit score will go up
Credit repair companies cannot guarantee to raise your credit score. Keep in mind that it is not possible for any truthful information to get removed from your report. Some untrustworthy companies will promise this — it’s a major red flag.
Potentially hefty fees
It is possible to repair your credit for free with DIY repair. When working with a company though, fees may pop up. An example to look for is credit score monitoring, which will cost you extra with a credit repair company but is actually a free service directly from your bank.
Not all companies are legitimate
Unfortunately, the credit repair industry harbors many scammers. To avoid getting taken advantage of, check to see if the organization violates the Credit Repair Organizations Act (CROA). General red flags to look for include guaranteeing to remove negative data, encouraging you to lie, telling you to not contact reporting agencies or not providing detailed terms and conditions.
Not all credit repair companies are a scam, but it is common. When determining the benefits of someone else handling your credit reports, weigh the ease of help against the potential cost.