Frequently Asked Questions on Credit Repair
Frequently Asked Questions on Credit Repair
A good credit score is more than just about getting approved for a loan or any type of financial assistance – it reflects your financial stability. A good credit score is crucial in today’s society as it will give you the ability to make purchases or any type of financial decisions. Good credit matters because it allows businesses to extend their services to you. From buying a home, renting an apartment, and paying for your monthly bills, these are possible if you have a good credit score.
Use this opportunity to take control of your finances. Learn as much as you can about credit repair and potentially turn your world around.
The idea of credit repair might seem daunting to some, but it should not be. Whether you choose to do your own credit repair or work with a professional credit repair company, if done right then the results are pretty much the same. The difference is, having someone from a professional credit repair company means you’re in good hands because they know what they’re doing. Before you do anything, it’s important to take time to educate yourself first.
How long will credit repair take?
Anyone who is new to credit repair will often ask this question. However, there is no definitive answer to this. Several factors can come into play that will determine how long it takes before you see any results or improvements to your credit score. There are three factors that can play a critical role: your financial goals, the extent of your financial trouble, and the amount of work needed to fix the problem. Every situation is unique. Therefore, an assessment of your credit situation is required before a specific approach could be mapped out. Any credit repair company that makes guarantees as to the amount of time needed to fix the problem should be dealt with caution. Even finance and credit experts know that there are way too many variables involved to make any affirmative claims.
How do you deal with negative items on your credit report?
It is highly recommended that you review your credit report on a regular basis. If you spot a false item on your report, you need to report it back to your credit agencies in order for the false information to be corrected. But what are you going to do if the negative item is accurate? The truth is, only time will make them go away. You can only do so much in terms of repairing your credit but you cannot legally remove those items from your report.
What if I filed for bankruptcy?
Thinking about credit repair after you’ve gone bankrupt might seem like a hopeless case. However, it is actually one of the best steps you can take. In fact, credit repair experts even recommend it. The moment you file for bankruptcy, some of the false information on your credit report could go unnoticed and poorly impact your credit score. At this point in your financial situation, any negative information is not good (especially when it is incorrect). A skilled credit repair expert can therefore provide extra set of eyes and use their expertise on the credit system to help you remove the incorrect information. Being in a state of bankruptcy can also be a treacherous spot to be in. The knowledge that there are experts guiding you through the process gives you more confidence that you are headed to the right path towards financial recovery.
Is credit repair worth it?
The importance of a good credit score lies on the impact it can make in your day to day life. When you start to realize what effect a bad credit score can have, it is easy to do the math. For example, a person with a bad credit score can spend thousands more on a home loan or insurance premium over a person with a good credit standing. It also causes a ripple effect on other aspects of your life, whether it is directly or indirectly linked to your financial needs. When you have a poor credit standing, it also makes your everyday decisions more critical as you do not want to dig yourself into deeper financial woes
The confidence of having a good credit standing and being in control over your finances are priceless. If you agree with this, then credit repair is definitely worth it!
What about debt settlement?
Debt settlement and debt repair are two terms that are often confused with each another. If you have a bad credit score and you want to make improvements on it, it is imperative that you take the time to know the difference. The wrong choice between two types of approach to fixing your credit could have serious repercussions.
Debt settlement is when you negotiate with creditors to build a new payment plan. However, the downside to this is that in order for creditors to accept negotiations toward your debt, the account must be past due first. This will prompt your creditors to agree to lowering your outstanding balance. However, they could have also reported to the credit reporting agencies about your account that has gone past its due date. When this happens, it can have a significant but negative impact on your credit score. Even if you managed to pay off the debt, it will still appear on your credit report.
When determining how to fix bad credit, it is always a good idea to study the pros and cons for each approach. Credit repair companies work differently since they focus on your report to make sure that the information is accurate, fair, and substantiated. Their goal is to get the items in your report removed if they do not meet the criteria mentioned above.
What is the Fair Credit Reporting Act?
The Fair Credit Reporting Act was established in 1970 and serves as replacement for the Consumer Credit Protection Act. The FCRA was established to give added consumer protection to ensure accuracy, fairness, and privacy when it comes to the use and handling of information collected by the credit bureaus. It also ensures that you have access to correct and accurate credit information on your report, especially when you engage a third-party service such as a credit repair company or creditors.
What are the credit bureaus for?
The credit bureau or consumer reporting agency is responsible for collecting information from creditors and courthouses in relation to the personal credit information of an individual. The information is sold or provided to potential lenders who would use the information to assess your credit-worthiness. Based on the information contained in your credit report, you will be evaluated if you are worth the credit risk for the lenders or other companies concerned that uses your credit score and information.
Is it possible to remove a charge off on my credit report?
An account that is left unpaid for about 6 months’ period (or about 180 days) is written off as a loss for that said company. In their financial statement, it is also known as a charge off. When a credit account reaches this particular status, the process of collecting payment for the debt is handed off to a third party collecting agency. The agency will then be responsible for contacting you about payment to your debt in an effort to recoup the balance.
How long will it take to fix bad credit?
Just like the question above on how long the credit repair process will take, the same can be said about fixing bad credit. The entire process will depend on the extent of your credit problem, as well as the underlying circumstances that go with it. It is therefore important that you find a credit repair company that understands your situation and makes a customized plan to fix your credit score, rather than one that uses a one-size-fits-all approach. There is no guarantee as to the time frame in which you can see an improvement in your credit score. However, the credit repair company you are working with should set realistic expectations. It should be a gradual process and not something that you can achieve overnight.
How can credit repair companies help?
Depending on the extent of your credit problem, there are some situations wherein a DIY credit repair can salvage the situation. But if you lack the knowledge or expertise, it is smarter to tap the services of the professionals and experts from a credit repair company. When working with a credit repair company, you need to sift through your options thoroughly. You need to identify the ones that offer legitimate services to restore your credit versus the ones that are looking to cash in on you. Before you can reap the benefits, you have some work to do in order to identify the legitimate ones.
If you do that, your hard work will pay off as you can enjoy a few benefits. A credit repair company must, first and foremost, help analyze your credit report. They will teach you how to read the information contained in your report and what their implications are. They will also provide you with insight as to how the score is determined and what factors could cause it to go up or down. Finally, they will teach you some strategies on how you can improve your credit standing. The goal with a reputable credit repair company is to help provide long-term solutions to your credit woes. Therefore, you need to be wary of companies that offer quick or overnight solutions!
Is it possible to remove negative items on the credit report?
There is a general misconception that negative items will stay on your credit report for a given number of years. However, there is no specific timeframe for this. Creditors have control over the information that they pass onto the credit bureaus. Therefore, they have control over the possibility of removing any negative items on your report. The only thing that is required of your creditors according to the Fair Credit Reporting Act is that the information reflected on your report is fair and accurate.
If, in case, the negative items on your report do not meet the standards set by the FCRA, then they will have to remove it from your report. In the event that the negative item is factual information, there are specified maximum time limits for these items to appear on your report. Once those limits have lapsed, they should be removed from your report.
For inquiries on your credit report, they will appear on your report for a maximum of 2 years. For other items such as charge offs, late payments, default on student loans, collection accounts, and others, they will appear on your report for a maximum of 7 years. Meanwhile, a bankruptcy filing will be reflected on your account for up to 10 years.
What is the cost of credit repair?
Credit repair is an investment. If you want to reverse your bad credit score, you need to be willing to shoulder the cost. With that said, bad credit repair will cost you money. But the longer you wait before you do something to repair your bad credit, the more it will cost you in the long run. It is best to take on the cost of hiring a credit repair company now and be on your way to establishing fiscal stability. The cost of hiring a credit repair service will vary from one company to another. You can decide on which to hire according to the cost of hiring such service and the help that you can get in return.
What should you focus on when fixing credit score?
When checking your credit report, you might be confused where to start or what to look for. Hence, a credit repair company can provide assistance and guidance so you know which areas to focus on. There are laws that protect consumers against false reporting by credit bureaus. In general, any information on a credit report should be fair, accurate, and substantiated. All consumers are therefore provided access to tools and resources that enable them to validate the information on the credit report. A credit repair company can also assist in using these tools in order to carve the path towards a better credit score.
Can I get approved for a loan even with bad credit?
Yes. Not getting approval when you have bad credit is a myth! You can definitely apply (and get approved) for a loan even when you have bad credit score. However, there will be certain setbacks associated with it such as possibly ending up paying a higher interest rate. The higher interest rate is linked to the fact that there is a higher risk of defaulting on your loan. The interest rate attached to your loan will also vary according to your credit score. Hence, it won’t be the same for all with bad credit – it is calculated independently. The higher interest rate is designed to offset any losses that the lender might incur should you become incapable of paying off the entirety of the loan.
Given your bad credit score, it is also a good time to reflect on whether it would be worth the disadvantages to apply for a loan. Unless it is absolutely necessary, you might want to hold off on applying for a loan until after you have restored your credit score. Else, there’s the possibility of doing more damage than good and it will cost more in the long run. When you have established a good credit score again, you will be in a much better position to apply for a loan with a good interest rate. In conclusion, you have to play it smart and work on credit repair first.
How important is credit repair?
Credit is a crucial part in every aspect of your life. From acquiring or renting a home, to paying off your monthly bills, you will face a lot of hardship if your credit score is poor. You will also be expected to pay a higher premium on your insurance coverage or get higher interest rate on your loans (if you do get approved at all) when you have bad credit. Inversely, a good credit score can positively impact your ability to generate savings. When you are spending less on insurance premiums, loan terms, interest rates, and other payments, you can use that money towards your savings. You can then use those savings for emergency fund, retirement, or other things you need to enjoy your life. Every basic need in your day to day life is directly or indirectly linked to your credit score.
The importance of credit repair should not be underestimated. The ripple effect extends not only to your personal life but the overall economy. Excessive amount of consumer debt will lead to higher inflation. A high inflation rate will in turn cause the purchasing power of the economy to go down. The stakes are therefore high. You should take it upon yourself to make improvements to your own credit score in order to contribute to the economy. At the same time, it is a significant improvement in your life as you can live with more confidence and a sense of security, financially speaking.
Change your credit standing now! We have the information you need to educate and inform yourself on how you can fix a bad credit. If you are interested in doing your own credit repair, it is possible as well. You can get information below on how you can do DIY credit repair correctly.
DIY Credit Repair
It’s true – a credit repair company can be your best tool towards gaining financial freedom and a better credit score. However, there are instances wherein DIY credit repair can also be applicable. You need to know the steps to take in order to manage credit repair by yourself.
The first step will be to obtain a copy of your credit report from any of the credit bureaus or reporting agencies. You can get a free copy once every 12 months. They will not provide you this report – you need to ask for it. You can order a copy online or call the credit bureau about your request.
Once you have a copy of your credit report, review the information especially for accuracy. If there are any incorrect or negative items on your report, you can file a dispute for it. When filing your dispute, make sure to do it in writing. In your dispute letter, you should detail the inaccurate information and provide copies of documents that support your dispute claim. You should also provide your complete name and address in the letter. To make it easier, you can even provide a copy of the report with the items in question circled as they appear in the report. You should send your dispute letter via certified mail so you will be notified if the credit reporting company has received your letter.
The credit reporting company must investigate your dispute within 30 days. The inaccurate information that you requested to be removed or looked into must be forwarded to the appropriate organization or creditor. The creditor must then report back to the credit reporting company about the result of the investigation – if the information will be removed or not – so that the appropriate changes can be done to your report on file.
Once the investigation to your dispute claim is completed, the credit reporting company must report it to you in writing as well. You should be provided with a free copy of your credit report with the changes in place (if your dispute claim was successful). If you require it, your credit reporting company can also send out notices to any individual or organization that they have previously sent a copy of your report to (with the false or inaccurate information) in the past 6-month period. Or, you can request for the corrected copy of your credit report to be sent out. Either way, these are all valid requests, especially if your credit report is of valuable substance with regard to an employment or loan application.
Conversely, if the negative information on your report is factual, then there is no legal means for you to have it removed. It will only be removed from your credit report after a certain period of time.