Tuesday, December 8, 2009

Credit Repair Service Work

Credit Repair Companies


There are a few ways a credit repair company can help you improve your credit score. Some of these companies only help you get false information removed. They will have you send them your credit report and tell them what information you believe to be incorrect. Then they will write letters to the creditors or credit bureaus to have it removed. This can take a while as they can go back and forth with the creditors a couple of times. Other repair agencies send letters to the creditors asking them to prove the information is correct, even if they know it is. The creditors, by law, must provide the contract with the original signature on it. Because the repair companies know that the creditors will most likely not be able to find the document, request the negative credit information be removed. This is especially true if the creditor has sold the bad debt to a collection agency. Because a creditor did not take out a loan with a collection agency, they can't prove it is owed them. In most cases you sign a contract with a repair agency and they charge you a fee to write these letters, and deal with the creditors and credit bureaus. According to "The Credit Repair Organizations Act," the credit repair companies cannot charge you until they have completed the services they told you they would do. They must also give you a copy of the "Consumer Credit File Rights Under State and Federal Law," before you sign a contact with them. Make sure you are dealing with a credit repair company that is legitimate and read the brochure.


Don't Get Scammed


Many of these so-called repair agencies are scams. They tell consumers that they can magically fix their credit overnight. This just isn't true. If they are telling you they can create a new credit identity for you, it is most likely illegal. If you are to participate in this fraud, you can be prosecuted. Others, prey on desperate people with real financial problems by making promises they can't perform. Once the consumer pays them to work on their credit, they disappear. These businesses can be checked out through the Better Business Bureau and the local consumer affairs office to see if there have been any complaints filed against them.


Credit Counseling


Credit Counseling is a little different than credit repair but can be much more beneficial. A counselor will help a consumer find out how they got into the position they are in, and devise ways to not only fix it, but to not let it happen again. In most cases, they require the credit lines be closed and no new applications made while under their direction. They will work with creditors to have late fees, over limit fees and balances reduced. If possible, they may even consolidate the debt into one loan with a lower interest rate and more affordable payment. They teach budgeting and live with less money. For the undisciplined or inexperienced consumer, this is the better option. One thing to keep in mind, anything a credit repair company can do, a consumer can do herself. It takes patience and diligence, but it can be done without paying someone else to do it. Credit counseling, however, is more about learning use money, and is well worth the fee.







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