Do Credit Repair Companies Work
Credit repair refers to getting rid of all the factors that lower your credit score off your credit report. With few or none of these factors plaguing your credit report, one thing that is for certain, is that you will have a better chance of convincing lenders that you are credit worthy, and thus receive credit extension.
To understand what the entire process involves, you need to read the Fair Credit Reporting act, as it clearly spells out the procedure you need to follow to boost your credit score.
If you prefer, you could solely try to improve the credit score. However, the process is long and time consuming which makes most people opt to hire the professional services of credit repair companies.
This leads to the question, do credit repair companies work?
This is a good question as with all businesses, you have the good the bad and the ugly. Some credit repair companies are legit and will offer you service that you will be proud of. However, this isn’t the case in the entire industry. According to the Federal Trade Commission, there are those that will take your money and absolutely do nothing to help salvage your situation.
How do Credit Repair Companies Work?
Effective Methods
Professional credit companies that are legitimate in the services that they offer, will use the same effective tactics you would be using to repair your credit. What this means, is that they will not only order but will also study the credit reports to find any disputable item that might be interpreted as a negative by potential lenders, and report this to the individual credit reporting agencies. By hiring a professional credit repairer, you will have a better chance having errors in your report detected.
Ineffective Methods
Unfortunately, there are those credit repair companies that use methods that do not work. One such method is the credit repair company challenging all the negatives in your report. These companies claim that while you are under dispute your record will be temporarily cleared, thus boosting your records. You need to be aware that this method does not work as the information stays on your report.
Another method that these companies claim works is re-establishing your credit report with an EIN (Employer Identification Number). However, you need to know that this method is illegal.
According to the Better Business Bureau, in 2006 it received over 1400 complaints about questionable credit repairers. More than 400 of these remain unresolved. You therefore need to take much caution, when choosing a credit repair company. You also need to know that you are responsible for any illegal action that the credit repair company takes on your behalf.
You also should know that using the EIN in credit applications exposes you to mail or wire fraud charges.