One of the most critical steps to take to get your finances in order is to work your way out of debt. Credit card debt makes up the majority of most people’s financial obligations and it could affect your ability to obtain credit when making significant purchases.
So, it is worth repairing your credit history by, among other steps, paying off your credit card debt. You could seek the help of a credit repair company – but that is not always the best step to take.
Here’s what you need to know about credit repair companies, whether they are worth contacting and how you could repair your credit reports yourself.
What Are Credit Repair Companies?
A credit repair company is an institution that helps you understand your credit by analyzing your credit report and helps repair it by disputing any inaccuracies with your creditors and credit bureaus.
Are Credit Repair Companies Worth It?
If it’s a legitimate company like Lexington Law, hiring a credit repair company can be worth it. Its professionals may be better equipped to tackle credit issues than you are on your own. They have knowledge of the provisions of the federal consumer laws and experiences helping many clients dispute their credit histories.
Regardless, businesses that offer credit repair services have gained a bad reputation over the years. The reason is that many scammers have found their way into this service and use the platform to prey on unsuspecting customers who desire to fix their credit ratings quickly.
The business is so prone to fraud because it’s easy to start a credit repair company. Anyone, absolutely anyone, can do it. Although federal laws regulate the activities of the companies once they are up and running, the laws are silent on any requirements for individuals or companies who desire to do the business.
Since the internet has made it easy for people to start online businesses, many people have opened credit repair businesses. They do not have to undergo any training or secure any licensing to start. They probably watch a few internet videos, learn some tricks and start advertising their business.
So, to answer the question of whether credit repair companies are worth it, we strongly advise against them unless they’re proven businesses like Lexington Law.
You Could Do the Credit Repair Yourself
On the other hand, companies like Lexington Law do nothing you cannot do on your own for free. In other words, you can do credit repair yourself. It only involves four easy steps.
Step 1: Get your credit reports free from AnnualCreditReport.com to find out what information they contain.
Step 2: Check to see if there are any errors or any incorrect information on the report. If you find even the tiniest mistake, it’s worth disputing. The error could be in your name, spelling, address, social security number, and credit history.
Check the credit cards listed, your major purchases, and the debt figure also. In case of an error, print the report, highlight the error and gather the documentation you need to dispute the information.
Step 3: Write your letter to the credit-reporting agency (TransUnion, Experian, or Equifax) and highlight the mistake. Explain it in detail and attach copies (not the originals) of the report and your documentation.
The credit-reporting agency should respond within 30 days. They should correct proven errors and serve you written notice of the changes made. The company also sends notifications of these corrections to relevant parties that received your report in the last six months.
Step 4: Once your credit errors are settled, it’s time to work on your credit status. Resolve to start paying off your debts, pay your bills on time, and avoid more credit issues. Live within your means and work to get to your preferred scores.
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