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A credit repair company tries to address errors that could be hurting your credit score. Such services usually charge between $30 to $100, and the process could take several months to a year. But do you need to hire a credit repair company? Frankly, there is nothing a credit repair company can do that you cannot accomplish on your own. However, the process can be time-consuming, so some people would rather have someone else do the work for them.
How Do Credit Repair Companies Work?
Before selecting a credit repair company, it is crucial to confirm whether it is legit or a scam through credit repair reviews on platforms like Bills.com. It is vital to note that the Federal Trade Commission advises against using credit repair services that claim they can help you establish a new identity using a credit privacy number or remove accurate negative information.
Legitimate credit repair companies usually go through your credit reports looking for information that should not be there and dispute it on your behalf. Most of them will also confirm to ensure the information does not appear again. Credit bureaus have 30 days to investigate after information on your credit reports is disputed. However, the company does not have to investigate disputes they deem fishy. Among the errors that a credit repair company can address include:
- Accounts that you do not own
- Bankruptcy or other legal actions that are not yours
- Misspellings that can mix negative entries that belong to another person with a similar name
- Negative scores that are too old to be included
- Debts that are not verifiable or validated
Hiring a credit repair company like Lexington Law might be worth it in some situations, such as dealing with complex issues surrounding the credit report, when you need to use your credit immediately, or simply lack time to handle the credit repair yourself.
How You Can Repair Credit by Yourself
There are three main credit reporting bureaus where you can start to check your credit report. They include Equifax, Experian, and TransUnion. The report details the top factors that negatively affect your credit score, known as risk factors. By addressing your risk factors, you are also improving your credit score.
The most crucial part of your credit score is payment history, which means making timely payments is the key to having good credit scores. If you had previous difficulties with your credit, try to bring any past-due accounts current and pay any charge-offs or collection accounts.
The second critical factor to consider is credit utilization, which is calculated by adding all your credit card balances and dividing the figure by the sum of all your credit limits. If you can lower your credit utilization rate, you can have a better credit score.
Additionally, you can dispute errors on your credit report directly through credit bureaus that have an online dispute process, which is often a fast way to deal with the problem. It would help if you also looked for accurate information that cannot be sustained.
Information that cannot be verified must be removed, although it can get reinstated after verification. An example might be debt to a supplier who is no longer in business unless they sold your debt to a collection agency that can prove ownership.
It is important to know that credit repair will not delete or cancel any unpaid debts from your credit reports. It would be excellent to clear your debts before starting the credit repair process. If you do decide to hire a credit repair company, evaluate each company’s credit repair reviews to get first-hand experience of other people who have used the company.