People have heard of credit report, but they do not realize impact the credit report has in their life. If you happen to have a good credit, your credit report is not likely to have any impact. But that only accounts for less than 20% of the population.
Think about it- about 80% people have erroneous information which is likely to impact their credit standing. Though the credit bureaus report information, you are held responsible for the information in your credit report.
That means if there are errors in your credit report, you are responsible to correct the errors. By the way, simply informing the credit bureau is not enough. You must go through the creditors to ensure they agree with your claims.
It is also possible that you have multiple errors across credit reports or you may have been a victim of widespread identity theft.
The process of disputing errors on credit reports and eventually correcting the data is considered as credit repair. Of course, you can do credit repair by yourself.
However, many people don’t have the time. Many do not understand how to make their case to the credit bureaus. They can hire a credit repair company to dispute errors on their behalf. These companies can charge a fee for their legwork. It is essential that you do your homework before you decide to hire credit repair service.
Is it worth the cost to hire credit repair service company, you ask?
If your credit report has erroneous information, it could impact your credit score. The lower the score, higher you are paying to creditor for your loan. The creditors decide to charge you based on your credit score at the time you apply.
For example, John has credit score of 720 and he has applied for a mortgage loan of $300,000. The lender is likely to give the loan at 4.5% ($1520 payment -P&I). You have credit score of 635. If the lender opts to give you the loan, you will get loan at 6.75% ($1946 payment- P&I). That means you will be paying $ 426 per month more than John amounting to over $ 150,000 over 30 years life of the loan.
Think about it- that is half of the loan amount you borrowed! It is very possible that by paying the credit service you may be able to get the loan at same rate as John’s rate.
Credit Repair Service
A reliable credit repair service leverages your legal rights to three standards:
- Credit report must be 100% accurate
- Entirely fair
- Fully substantiated
What does that mean to you as a consumer, you ask.
That means a reliable credit repair service company will do following for you:
- Repair Your Past
- Work with the credit bureaus and your creditors to challenge the negative report items that affect your credit score.
- Ensure your credit history is up-to-date, accurate, and reflects you honestly.
- Monitor Your Present
- 24/7 Credit Monitoring
- Alerts to keep you aware of the changes and updates on your report
- provide customized information and advice about newly reported items affect your score
- Build Your Future
- Provide customized tools and proven technology to maintain healthy credit score
- Provide educational tools to accomplish your credit goals.
Credit Repair Service Functions
Here are major steps credit repair service will take on your behalf:
Pull your credit reports from each of the three major credit reporting agencies to pinpoint your credit issues.
It is necessary to pull all three reports because each credit reporting agency has its own “data-furnishers” (aka lenders, credit card companies, debt collectors, etc.) who report your credit information to them. And there may be errors that appear on one of your credit reports, but don’t appear on the others.
You’ll then give any supporting documentation you might have or need.
Work with bureaus and data to determine if the item should be removed from your credit report.
Use following laws to look out for your claims:
- Fair Credit Reporting Act
- Fair Credit Billing Act, which regulates original creditors
- Fair Debt Collection Practices Act, which oversees collection agencies
You must be wondering how long credit repair takes.
No one can truly predict but note that credit bureaus must respond and resolve a dispute within 30 days (exception may allow 45 days). It is not necessary that by removing/resolving disputed items, your credit score will improve immediately.
You are also wondering how much you will have to pay. It is not easy to answer because your goal should not be just fixing the credit report. The service must include restoring credit and monitoring continuously so your credit score does not slip, or you become a victim of identity theft. But be sure that you hire reputable, ethical company.