A low credit score makes borrowing complicated. Lenders either reject your applications or charge outrageous interest. Their logic is understandable. When the FICO total drops below 700, it characterizes you as a potentially risky borrower. Credit repair companies improve the score by erasing damaging details on your records. Here is how this works.
By law, every citizen of the United States may request a copy of their reports from all three credit agencies annually. In theory, you could pore over these documents, identify the errors, and dispute them yourself. However, if this were easy, the repair industry would not exist. Professionals will liaise with lenders and agencies, accelerating the process.
Why Pay for Repair?
Gerald Dunigan from CreditFixed outlines the main challenges for consumers. You need to collect evidence and write letters of specific formats to different organizations. It is necessary to navigate applicable laws and regulations and master the intricacies of formal communication. On average, this takes between six months and a year.
So, how do credit repair firms help? The process includes several stages. Companies offer different packages and add-ons, but their core services are similar. Their teams perform:
Information Collection and Analysis
First, analysts review your case during the first consultation (it is often free). They collect reports from all three major bureaus in the country (Equifax, Experian, and TransUnion). This is crucial, as different lenders share data with different record agencies. These organizations do not share information with one another, so one or two documents give an incomplete picture.
The team thoroughly examines all the items, going line by line. They identify outdated or inaccurate entries. These may be false charge-offs, judgments, repossessions, tax liens, etc. Such negative information is damaging, so it must be eliminated to repair your credit. Note that only incorrect details may be removed. No repair agency will offer to raise your score by manipulating the data.
Preparation of Evidence
To prove that the entries are false, the company will gather proof. This includes bank statements and other documents. If you prepare the case yourself, your evidence may be insufficient, and the agency will request more details, which makes the process longer.
The firm can send different types of formal requests to your lenders, bureaus, and collection agencies. Through debt validation letters, the team will ask the lender to confirm your debt’s existence and size. The institution must prove that you owe a particular amount of money.
Some companies will also send goodwill letters. These ask creditors to delete outdated and negative entries, even though they are not obliged to do it. This method does not always work, but you may be in luck.
The Disputing Process
After the company collects evidence to back up the claims, it prepares and sends dispute letters to the bureaus. By law, every agency has 30 days to respond. They either remove the errors or ask for more proof.
In the meantime, the experts may also communicate with the collection agency, which is bothering you. Official cease and desist letters stop their phone calls while the disputing is in progress.
Most commonly, a provider has an entry-level package with the bare essentials and premium service bundles with extras. As a customer, you can monitor your score online or through the company’s app. Many firms offer free educational resources and tools. They help you develop budgeting skills and improve your credit in the future.
You may even access a special credit line. If a report is tarnished because of irresponsible borrowing, there is no way to fix it. The only opportunity to raise the score is by taking out new loans and paying them back diligently.
How Long Does It Take?
Improvement of FICO scores is not a matter of days. Collection of evidence and disputing takes several months, which is why all such agencies charge a monthly fee. The more mistakes there are — the longer and the pricier the process. Still, repairing through a firm is always faster. Unless you are an expert in credit law, paying an expert will save a lot of time.