Credit Repair: What is it?
Credit repair is when an organization or company helps individuals improve their credit scores by removing negative information from their credit reports. These services are a good option if you want to keep your finances safe and improve your credit score at the same time. Credit repair is legal according to federal law and is a popular service in the U.S.
These services can help remove unverifiable or incorrect information from credit reports and help consumers get better credit scores relatively quickly.
Federal Credit Repair Organizations Act: What does it Cover?
The Federal Credit Repair Organizations Act (CROA) explains the role and responsibilities of credit report services and how they improve credit reports.
The act also states that credit repair companies cannot make false changes to the credit report as it is illegal. These organizations cannot suggest users change their identity information to avoid poor credit reports.
What do Credit Repair Companies Do?
A credit repair company does more than help correct your credit report, as it also helps communicate with the credit reporting bureaus or furnishing companies that report your credit details. Most of the furnishers are debt collectors, such as banks or credit card issuers.
Credit repair companies need to either remove the negative information entirely or modify it for better credit reports.
The credit repair companies can contact the creditors or credit reporting bureaus through the mail, phone numbers, or other contact information. They can discuss your particular credit report scenario and find standard solutions to the problems.
Many credit reporting companies use jamming, which involves sending repetitive letters communicating your case. The credit repair companies may also send the same letters to the furnishers requesting them to improve your credit report as soon as possible.
There is a 30-day period according to the Fair Credit Reporting Act (FCRA), after which the disputed account gets deleted.
How Much Does a Credit Repair Service for Identity Theft Cost?
Identity theft is a serious concern and can cost victims thousands of dollars. Thus, the credit repair service charges may vary for your particular case, the amount you have lost, and the kind of credit Repair Company you choose.
These companies have two primary methods of charging their clients. One of these methods is the garden variety subscription service that charges the clients at the end of the month. The majority of these services cost around $50 up to a few hundred dollars.
The second payment option that credit repair clients get is pay per delete, in which the company charges you for every individual item it deletes from the list. The pay per delete method is better for most people because the service remains dedicated to your case. In addition, consumers do not have to pay anything for the service if they do not do their work correctly.
Hiring Credit Repair Companies: Is it worth the investment?
There are many dualities in the effectiveness of credit repair companies because most of them promise results, but there are no statistics to prove it. You cannot check their number of clients, disputes, or solved cases, making it a bit risky.
However, hiring credit repair services can still be a good idea if you deal with credit report issues and need professional assistance. Try to look for leading companies that have sufficient experience and exposure in the credit reporting business. These credit reporting services can help you maximize your chances of fixing your credit report in case of identity theft or other credit reporting errors. To learn more, read our list of the best credit repair services.
List of Credit Repair Services