Some credit repair companies seem too good to be true in fixing credit score issues--and that's because they are
We've all experienced a late payment that hit our credit score; and the years-long process of perfect payment history to overcome that stumble. As delinquencies on credit card debt rise to pre-pandemic levels, the National Foundation for Credit Counseling has seen a demand for credit counseling services.
Companies that sell "credit repair" services are also on the rise-- alluring to many people eager for a faster fix to their credit score.
However, these companies are rarely effective. Credit repair companies typically blitz credit bureaus with dispute letters with the hope of getting negative information on a credit score removed. But these letters rarely work. If the negative information is accurate, there's no way to have it erased or repaired. Negative information like missed or late payments remains on your credit report for seven years, while a personal bankruptcy stays for 10 years. For people attempting to erase these mistakes, paying for credit repair is fruitless.
What’s the best way to protect my credit score?
Paying bills on time and keeping your use of credit low are the best way to build and maintain a good score. You should also regularly check your credit score for errors, with free reports from the big bureaus (Equifax, Experian and TransUnion).
How can I repair my credit score, if I have issues?
You can search online at the National Foundation for Credit Counseling for reputable credit counseling agencies. The Justice Department also maintains a list of agencies that are approved to provide pre-bankruptcy counseling, credit counseling, and debt-management plans.
If you’re having trouble with your credit due to missed debt payments, one alternative is to seek advice from a nonprofit consumer credit counseling agency. Such groups can assess your finances and arrange for a debt management plan, which will allow you to pay off your debts over time. Some agencies may charge a fee, which is offset by a lower interest rate negotiated by the agency.
However, be skeptical of debt “settlement” companies. These companies pressure borrowers to stop paying their lenders; and instead send their payments to the settlement company. The settlement company then takes a cut of the borrower's payment and negotiates the lender into accepting less money than what is owed.
Conclusion
Improving your credit score lies in conscientious financial habits. Avoid the allure of quick fixes offered by ineffective debt settlement and credit repair services, as they often come with hidden pitfalls and may not deliver the promised results. Instead, focus on the power of steady, incremental progress. By consistently paying your bills on time and keeping your credit utilization low, your credit score will naturally rise and open doors to better financial opportunities.