Home > Credit Repair > A Credit Repair Company Is Your Friend Indeed?
A Credit Repair Company Is Your Friend Indeed? |
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If you think that someone will be able to repair your credit by eliminating negative, accurate information from your credit report, you must be living in a fool's paradise. Moreover, if you pay that company to do this credit repair for you, it will be a big waste of your time, money and efforts as negative, accurate information on your credit report, though temporarily removed, will definitely reappear again in a couple of months. Do not be allured by credit repair companies that promise impossible results at a fee. All that they do is to write to the credit bureaus pointing out that certain listed information is false and the agencies have to remove that information while they carry on the investigations. The credit repair company sends you a clean credit report at that time and collects its charges from you. However, all the negative information will reappear shortly on your report and you will be left high and dry. You must remember that any credit repair company cannot remove accurate, negative information from your credit report. It is only by paying off your debts on time that you can rebuild your credit record. You can do legally anything that the credit repair company promises to do at little or no cost. The law empowers you to dispute, at no charge, any incorrect or incomplete credit report information. It is, however, important to distinguish these credit repair companies that promise to fix current and accurate poor credit ratings for a fee from nonprofit credit counseling services that counsel consumers to pay their debts on time to reduce their debt and thereby improve their credit rating. You should be aware of the law, as enacted in the Credit Repair Organizations Act, that restricts credit repair companies from charging any fees until services are carried out and makes it mandatory for them to inform consumers of their legal rights in a written contract, which should include notification of all services performed, the time it will take to execute these services, total cost, any guarantees, and an explanation that consumers have three days to cancel the service at no charge. Credit repair counselors, on the other hand, encourage you to reduce your debt by paying your bills on time. They do not make false claims of improving your credit. However, some of them operate by asking you to send them your check every month, out of which they distribute the payments to your various creditors. There is a risk factor in this arrangement, as any delay on their part will unnecessarily lower your credit score. You should also beware of "Debt negotiators," posing as nonprofit credit repair organizations that advise you not to pay your credit card bills at all. After many months of nonpayment, they convince creditors to settle for less money than was originally owed, thus branding yours an uncollectible account. In this process, they charge upfront fees, maintenance fees, and monthly fees, all of which are supposed to be placed in a trust account. Due to the many over 90 days late remarks and collections notations, your credit rating will be further devastated. Moreover, IRS will consider the money that you will supposedly save as income. You should never pay up front money to credit repair companies, as they might do nothing and simply vanish into thin air. Credit repair companies are supposed to provide a written contract in advance that spells out your rights and cannot charge you until they have completed their promised services, as per the provisions of law. The best solution to your credit problems is to arrange for a repayment plan that will enable you to rebuild your credit by making consistent monthly payments, which will reflect positively on your credit report. Any nonprofit credit-counseling agency can help you in this regard. There is, however, nothing better than paying your bills on time to improve your credit rating. This is the best credit repair plan. |
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