Updated: Aug 11, 2020
Help, I'm clueless about how to fix my credit.
Originally published 03/2017
Are you thinking about contacting a "Credit Repair" company for help? Or maybe you're already paying for credit repair services?
You might want to rethink your decision.
Credit Repair companies are popular because they claim that they can “clean up your past” or “fix your mistakes.” These kinds of vague promises are understandably appealing - it’s like they're offering a time machine, but one that specifically takes you back to erase stuff you did with your money.
While wanting to improve your credit is a great thing, using a time machine is not a *real* option. Here’s what you need to know about Credit Repair...
The 411 on Credit Repair
Credit Repair companies, in short, are companies that promise to fix your credit for you. They claim that they have the magical power to remove negative information from your credit reports, thereby improving your credit scores and making you 15% more physically attractive. J.K. about that second claim.
In reality, they do something you can easily do for yourself, for free: they file lots and lots of “disputes” against information on your credit reports.
In order to explain how completely absurd this, is we have to have a little talk about what disputes are...
Side Note: It’s easy to confuse Credit Repair with Debt Settlement companies. Debt Settlement companies do something much more complicated and alarming. We’ll talk about them in a separate article.
Hop in the Delorean Marty, we’ve got some credit mistakes to erase.
What’s a Dispute?
Have you ever found incorrect information on your credit reports? Maybe a family member’s social security number is showing on one of your reports, or there’s a collections account that isn’t yours. These kinds of credit reporting errors are unfortunately very common.
According to the law, every consumer has the right to have incorrect information removed from their credit reports *yes, we actually need a law for that.* Whenever you find an incorrect item on your reports, you can have the error removed by filing a dispute. Filing a dispute is 100% free and it’s really, really easy to do. It's so easy, in fact, that you might as well do it yourself. I’ve done it before and it only took me about 5 minutes.
How Do I File a Dispute For Myself?
First, take a good look at your credit reports (here’s how to get all three of your reports for free). Make a note of any errors, and locate the dispute information. You’ll usually find a link to a dispute page hidden near the credit bureau's contact information.
Next, visit the credit bureau's website. In short, you'll answer some security questions and submit a brief statement about what's wrong with your report. In my case, I had to explain that I was billed for a medical service I never received.
Credit reports are like a box of chocolates. You never know what kind of nutty stuff you might find inside.
Pro Tip: When filing your dispute make sure you focus on factual evidence. Including documents is the best way to make your case. Your written statement should read less like, “This info is wrong!” and more like, “I did not receive X service on X date as evidenced by X document I’ve attached.”
What Happens After I File?
When you file a dispute, the credit bureau is obligated to investigate your claim within 30-45 days and then send you a written response. If they cannot verify the information on your credit report, then they have to remove it… at least until they can prove it's accurate. This is the loophole that Credit Repair companies take advantage of.
Instead of disputing incorrect information, Credit Repair companies dispute every negative item on your report. By overloading the credit bureaus with disputes, they sort of jam up the system, and thus your negative information is removed... temporarily.
Those erroneous disputes are gonna come back to haunt you!
But Sarah, I’ve Had Great Results With a Credit Repair Company!
I hate to be the bearer of bad news but the results may not be what you think they are. I’ve worked with a handful of people who claimed that Credit Repair was working for them. Unfortunately, I had to inform them that the fix was only temporary.
Once the credit bureau locates your accurate information, it will reappear on your reports. In other words, you can’t simply dispute your way out of missed payments or collections accounts. These things can only be fixed with time or money. Contact me if you’d like to figure out what your best options are.
Bow down to me, lowly Credit Repair Company.
In Summary, Credit Repair companies are not worthy.
If it’s not already clear, Credit Repair companies are completely unnecessary. It takes more effort to contact a Credit Repair company and set up service/payments than it takes to file disputes on your own. Plus it's an expensive and temporary fix.
In full disclosure, I harbor a bit of personal resentment against Credit Repair companies. They distract people from working with qualified professionals *like me* to make real credit improvements.
Don't want to take my (biased) word for it? The Federal Trade Commission and the Consumer Financial Protection Bureau have both written guides on avoiding Credit Repair companies and how to get better help with your credit issues.
As always, I love hearing your questions and comments.
Leave me a little love note down below to let me know you were here!
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