The credit crisis has left behind a swath of ruined credit — from people who are struggling to avoid bankruptcy and foreclosure. For a lot of people things seem hopeless, and unfortunately, these are times when vultures come out of the woodwork to try to exploit the vulnerability of those who are desperate or naive. These vultures are attracted to your bad credit like a moth to flame. Well, that’s because it’s how they make their money — by trying to help you fix it for a large fee.
The truth is, you can’t pay a company to remove correct and timely negative information from your credit report. So if you’ve missed a few payments on your personal loans or credit cards, if you’re in default, or if you’ve declared bankruptcy recently, nothing but time can make your credit report look better.
Request Your Credit Reports
But you can still take measures to protect yourself. You can of course visit AnnualCreditReport.com to request copies of your credit report from the three credit bureaus. The big 3 — Experian, TransUnion, and Equifax might have different information about you, so it’s important to study all three reports for mistakes or inaccuracies. If you are also curious about your credit scores, you may want to pick up your FICO credit score or see if a free credit score may give you enough of an idea of how your credit stands (usually these are proprietary). Check out our article on credit scoring variations for more clarification on scores.
If you’ve been subject to some bad mojo — maybe you’ve been turned down for credit, or if you’re unemployed or suspect fraud, the credit bureaus may offer you some mercy. You might be able to obtain your credit report and score for free in this case! If you’ve already pulled the free annual reports for this year, the credit agencies can tell you if you’re still eligible for a no-cost report.
Review Your Credit Information and Report Any Problems
Now say you’ve discovered an issue with your Experian credit report, then what should you do? Here are a few ideas:
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Notify the credit bureau in writing.
In the event you’ve found a problem with your credit information, write your credit agency. Also, you should determine if your creditors are seeing the same incorrect information. Could someone else’s information be mixed up with yours? If so, address it swiftly. -
Keep copies of all relevant documentation.
I suppose it’s common sense, but it bears repeating: if you send letters out, make sure you’ve made copies. This also goes for your original credit card statements or other important documents that back up your claims. -
Make a formal claim or report your dispute to your bureau or card company.
Neither the credit bureaus nor your credit card companies should impose a fee for challenging an inaccuracy. If you don’t want to report a dispute through the mail, you might be able to call up the company or make your claim at the company’s website. For example, TransUnion has information on how to initiate the dispute process.
Repair Bad Credit But Avoid The Scams!
You’ll need to be very wary of any company that approaches you with the offer to clean up your credit for a huge fee. Because if your credit report is accurate, it will take time to clean up your credit, which you can do on your own by employing responsible money management habits. The bad news is that it typically takes seven years for a bankruptcy to move off your credit report and no one can wave a magic wand to fix your bad credit, no matter how badly you’d like a quick fix.
Watch out for some warning signs: credit repair companies that don’t disclose what your legal rights are or how you can repair your own credit might be fraudulent. Beware of those companies that demand payment for services upfront, or that try to give you access to someone else’s credit. Even if your credit turns terrible, getting involved with a fraudulent company isn’t the way to fix anything! That would mean leaping from the frying pan into the fire.
Find Legitimate Help
If you’re the do-it-yourself type, you can invest in a few useful resources such as these ones I’ve come across:
- Amazon has a lot of credit repair books and resources available.
- Steve Bucci created the Credit Repair Kit for Dummies. This title can take you through the steps to contact your creditors, build new credit, and more.
- Nolo has a guide called the Credit Repair Bundle that includes a book with a CD-Rom to help you with the letters and forms you’ll need to repair your bad credit.
- What about a credit counselor? Credit counseling may be worth checking out. The National Foundation for Credit Counseling or NFCC can help you find a free or low-cost counselor in your area, plus, they also offer consumer tips and advice.
You certainly don’t want it to be any harder to get the best home loan rates, to buy a new car or to obtain new credit, so if you notice that your credit report has any problems, do address the issues as soon as you can. The takeaways here are to review your credit reports for any mistakes on a regular basis, then to resolve those issues. While repairing your credit does take time, it doesn’t have to cost a lot of money.
Copyright © 2009 The Digerati Life. All Rights Reserved.
{ 23 comments… read them below or add one }
Some other considerations are:
Stop reckless spending. Cut up your existing credit cards and start paying off the balances. The minimums plus 5-10%.
Get a secured card with a preset spending limit.
Don’t use the credit card like cash.
Take a moment and ask yourself how much your last purchase will cost you with the interest added on and the card is paid off.
I like your post and thank you for taking the time to share these tips with us.
We all needed a wakeup call and the warnings about scammers is essential.
Just My 2 Cents
Andrew Brinkworth
Thanks for sharing this information. Some years ago I really had problems with my credit and I know what a fuss it is. These tips are very useful no doubt. The idea of keeping the copies of all the documents is important and I will not miss this out. Thanks:)
I think this article underscores our vulnerability in difficult financial situations. In many ways it is hard to function rationally and make good decisions. I think it would be valuable to surround yourself with a (1) trusted (2) knowledgeable friend who has your best interest in mind. Sometimes that second perspective can go a long way in (1) helping you execute the task (2) helping you properly understand the implications of your decisions.
The credit crunch has demonstrated how bad excessive debt can be at anytime, but especially during an economic downturn. There are not too many easy ways out of credit card debt that don’t involve pain, and a major change in lifestyle. Larry Winget and Dave Ramsey are in-your-face anti-debt evangelists who have written numerous books on the subject and also have videos on YouTube and Hulu. I find them to be very effective, and their advice tough, but good.
Getting started with repairing your credit is one of the very best things you can do for your financial well being. That is why choosing the right company to help you achieve your credit goals is pivotal.
It’s sad that some businesses can only make money by taking advantage of someone who is already in despair.
I’ve heard my fair share of horror stories from people that have fallen victim to shoddy credit repair companies. I agree with Craig that many do not make good decisions based on their fragile emotional state and these companies count on that to make their sale. My advice is to always sleep on it for at least one night. You should give yourself a little bit of time to notice the red flags.
An affordable solution. The credit companies know the rules. People, if a third party company is doing your credit repair, the three major companies do not have to do anything. so what’s your excuse?
It’s amazing how bad money management skills are in the US. I wish that money management was a required class in High School and College. It would be at least as valuable as classes like State History.
We can’t hide the fact that at this present time worldwide we are experiencing an economic downturn. Since 2008 there is a large percentage of people who have filed for bankruptcy because of financial problems. Too bad that instead of helping these people there are some people or groups that are taking advantage of the situation.
True credit repair professionals provide an incredibly valuable service. But there are also those that misrepresent themselves and the services they offer. These deceptive practices will waste your money, and in some cases leave you worse off than ever.
Yes, well we do our best here to provide information on credit repair and monitoring services. But I strongly urge all consumers to do the appropriate due diligence before signing up for any service. Or at least, to understand all terms associated with a service so that there are no surprises. Many times, the issues and problems arise because consumers feel they are “misled” about what a service is providing them. The fact is, there is no magic bullet to credit repair, and a lot of the solutions you’ll need to take will require time to execute. There is no overnight remedy to this sort of thing.
Any company who promises you a quick fix is lying or is questionable. A legitimate service will let you know what they can help you with — sometimes, it’s just to help you develop and organize a plan or to help expedite some tasks you can do yourself.
I was able to improve my credit score from 540 to 630 by paying down accounts, settling old collections. I was able to do this in less than 6 months in order to be able to qualify for a mortgage.
It’s pathetic that many companies need to take advantage of people in order to make a profit.
Not all Credit Repair Companies are scams. It’s unfortunate that there are some that are. It makes it that much harder for the guys who aren’t promoting scams to prove themselves. Do your research and you will find one that can help you. It’s a whole lot easier to have educated accredited help.
As I read comments of sadries (my word) of companies making money on the people who are already in despair, hurting, down, etc., remember this to be true. We are the ones putting ourselves in the situation. Good, bad or indifferent. One would only look with eyes of sadness, anger or whatever (concerning the issue of making money for services rendered to repair/better position credit) with out fully being aware of supply and demand. There’s nothing wrong with that.
What about dentists fixing our teeth from cavities from neglect of care? What about the govt. taking the wages of someone to help pay for child support when the person isn’t making enough as it is? These are two very different examples, but they’re related to how things are in the world. If you’re gonna play – ya gotta pay. Some more than others.
If the daunting task of researching great credit repair companies /not on a scam list somewhere gets to be a beat-down… GOOD. Maybe it’ll be a lesson learned the first time around. Maybe “this time” we’ll be more intelligent of knowing certain things regarding credit. And, if you think paying on collections is gonna finally help you increase your score and you know who you are, think again. It’s just the same in every aspect of life. If you’re gonna participate, it’d be to your advantage to know the most you can in that field. It’s not just having the authority to use a credit card.
Being aware of our needless spending habits to knowing what the perfect mix of credit that’s needed to keep and accelerate a FICO and all in between. I don’t rightfully know what came first, the smooth talking creditor or us having the “ability” to make the wisest of choices in our lives. For those of us blessed enough to grow up with parents who mentioned / talked about the importance of having good credit but didn’t listen well enough to use the advise….. What happened?
For the rest of society… Who really can pin-point the reason. “No one told me” “I never grew up with guide lines” “No one was around to show me” and any other excuse you’ve adopted as your reason. Although any reason you say to yourself may be true, it has nothing to do with having the ability to do some gettin’ to know of that in which you’d gladly participate. So, please don’t be hasty nor ignorant (not stupid) in making a judgment call of companies profiting from services rendered.
SCAMS and LYING COMPANIES, that’s a whole other topic. I only say all of this because I was in the same boat and had to go through it. I work with a very reputable credit repair service now in Addison, Texas and I hear on a daily basis of people in their late 60’s or so giving reasons why they did what they did or how/when they started.
EVERY – SINGLE – DAY more than 30 times a day. Talk about preventative therapy –
In these situations its imperative to remember that if it sounds too good to be true, it probably is. If these companies could indeed do what they claimed, that payment amount would seem like a pretty good deal. Based on the improved interest rate you can get with a good credit score, consumer’s could certainly save that amount right off the bat. Making the service more than worthwhile.However, what they promise just isn’t possible.
What people need to realize and take from this is that there are no quick fixes for your credit score if the information is accurate. That’s not to say that the entire credit repair industry is a scam. Credit repair done the right way gets rid of information on there that might be wrongly attributed to you or simply reported inaccurately. There certainly is a whole lot of that going on. People of course can attempt to clean up wrong information themselves, but as with any service its a whole lot easier if you hire a professional. Making sure all the information on your credit report is really you AND reported accurately is the service that legitimate credit repair organizations offer. Anyone offering you anything more than that, and wanting payment upfront to do it, is simply looking to take your money.
Check out my blog on credit repair scams over at Debt Gazette.
There is no need to pay anyone a dime to repair your credit. You have the same authority to your credit report that they do, they have knowledge and experience (some of them anyway) which you can get just by doing it yourself. Sites like my blog (ecreditrepairinfo.com) can provide you with step by step instructions and guidance on how to effectively repair your credit.
There is no magic potion, repairing your credit takes time and effort, but it can be done. Don’t think that all your judgments will just disappear, but in my years of experience I have seen things like that happen. Many times the system is so overloaded that your disputes fall to the wayside and then the credit reporting agency is obligated by law to remove the items from your report. Is that the norm? No, they usually respond. There are ways, however, of making the system work to your advantage. Become familiar with things like the Fair Credit Reporting Act, and the FACT Act of 2003. Credit repair laws are changing all the time, what you couldn’t do last year you might be able to do this year.
I am opposed to having someone fix everything for you. I tried that years ago before I was a credit counselor. I never took my credit history seriously until I busted my hump sending letters and making phone calls, and filing papers. Just like anything else, the more you put into it, the more you appreciate the results. When you finally repair your credit back to normal, you will think twice, even three times before doing anything to tarnish your score again.
Learn the ropes yourself, get your 3 free credit reports that the law entitles you to have every 12 months at annualcreditreport.com, that is the official site created by the credit bureaus for you. Any other site is a phony. You shouldn’t have to sign up for any service or give any credit card info for these reports, if you do then you are at the wrong site.
After that, analyze your credit reports and create dispute letters to send to the credit agencies first. Check out my blog for detailed steps if you want. DON’T SUBMIT DISPUTES ONLINE. and DON’T SEND DISPUTES TO THE ORIGINAL CREDITOR FIRST, ALWAYS TO THE CREDIT AGENCIES FIRST.
Good luck.
Credit repair companies provide a service. Just like Jiffy Lube or HR Block. You can change your own oil or do your own taxes, but some people would like an experienced professional to do the work for them. Why struggle fixing your own plumbing, when you can hire a handyman to come and do it for you.
Watch for the scams, but their are some legit reputable companies doing a great job.
People just don’t understand money. Oh well the rich get richer and the poor……. well you know.
Yes, it is best to always repair your credit yourself, but guess what, not everyone wants to do it themselves. Some people want to hire someone to do the work for them. So stop telling people what to do with their credit.
@Matt @ ArcherCredit,
Thanks for your opinion. We welcome all opinions here. Yes, some people want to DIY and others want the help. Of course if you DIY, it takes some time and work. And when you’re dealing with credit and debt issues, it’s often that people are taken advantage of. Hence, the popular advice is to try to do things yourself if you can before resorting to outside help. If you really need the help, then seek it.
There is really no reason to pay credit repair company to do this for you. To be successful you will need to know the information, strategies, tactics they use. Most people fail in repairing their own credit is they try to use nothing but free information by those who don’t really know how things really work and not approaching it in a systematic and consistent manner.