How Do Credit Repair Services Work?

Most of us would die to have an appealing credit report. The main reason being our credit scores and reports highly influence our financial decisions that impact our lives. 

Credit repairing services can help you sort your credit report errors. If you are having a hard time with bad credit, credit repair services can help you but at a cost. 

If you have a hard time with bad credit, you come across credit repair companies for cleaning up your credit report. That is, getting a loan, a fantastic interest rate, a competitive insurance premium, and even securing a job can be impacted by what’s on our credit reports.

All hope is not lost for those with poor credit scores, as there are plenty of better ways to rebuild your credit. 

What is Credit Repair?

Repairing your credit is done by hiring a company to fix your bad credit by removing inaccurate and harmful info on your credit reports in exchange for payment. 

You get information on your credit status by communicating with the credit bureaus (Experian, Equifax, and TransUnion) and financial companies like your bank to dispute the errors. 

There can be a lot of disputes, but the end goal is to have negative info deleted from your credit file. Therefore, improving your credit ratings. Credit repair services don’t help you manage your money. 

Management of your money is a service offered by credit counseling companies like the National Federation for Credit Counselling (NFCC) and the Financial Counselling Association of America (FCAA).

What are Credit Repair Services?

These are services that a credit repair company offers to improve your credit in exchange for a certain amount of fee. The organizations often promise to “handle all the heavy work” with credit reporting agencies.

According to the Federal Trade Commission, the credit repair industry is fraught with scams. Therefore, it is crucial to investigate any credit repair organization before working with it.

How to verify a credit repair company: McClary says, “there are all kinds of ways” to vet credit repair businesses. Here’s somewhere to start.

  • Read the reviews of the company on the Better Business Bureau website.                               
  • Search for the consumer financial protection bureau’s complaint database.

If the company boast that it can do any of the following, it’s a red flag and likely a sign of a scam:

  • Guaranteed improvement of credit 
  • The organization requests you pay before it provides services 
  • Legally create a new credit identity for you 
  • Remove accurate negative info from your reports

Therefore, we recommend seeking out a credit counselor first. Counseling can help give you a better idea of what’s in your credit reports and how to improve your financial situation long-term.

How Do Credit Repair Companies Work?

Ultimately, most credit repair companies communicate on your behalf either with the credit bureaus or with the companies that reported or “furnished” your credit info to the bureaus. Most legit companies inquire for a copy of your credit report from each major consumer credit bureaus.

The organization will review your credit reports for derogatory marks, like:

  • Charge-offs  
  • Tax Liens     
  • Bankruptcies

Afterward, it will plan to dispute those errors and negotiate with creditors to eradicate those Items. 

Communications by credit repair organizations can happen via the internet, phone, or U.S. mail. The U.S. mail has historically been the method that credit repair companies have preferred for several reasons.

Mailing letters might sound unsophisticated, but it’s the only way that credit repair organizations tend to operate. Certain credit repair service providers use a technique known as “jamming,” which entails sending repetitive and often casual letters to various credit bureaus. 

Therefore, the credit company will send a large volume of dispute letters, so that either the credit bureau, lender, or debt collector will fail to process the dispute within the 30 days specified by the Fair Credit Reporting Act (FCRA), resulting in the account being deleted.

The organization may also recommend applying for new accounts to add positive info to your reports. Be extra cautious here. If you’ve ever had trouble managing credit in the past, a new account may not be the best option. Also, it is not advisable to take on more credit if you don’t need it.

How Much Does Credit Repair Cost?

credit repair services

Credit repair companies are not free, but payment is made after they have done their service. These are done in two ways: Any item removed from your credit report is charged, and you are charged monthly. 

Once a month, they will charge you for the services provided during the previous 30 days. The fee per item is charged once the info is removed from your credit file. Exact fees vary by service rendered.

Credit repair organizations must first deliver the promised results then request payments afterward. For each derogatory mark removed from each of your reports, you might pay a one-time flat fee but that depends on the type of company you’re using. The pay rate can start around $35 per deletion and could range to $750 or more.

Does Credit Repair Take Time To Get Resolved?

The dispute you sent to the credit company bureau takes 30 days to investigate and verify. Typically, the credit bureau is required to send you the investigation results within five business days of the completion of the investigation. 

If the credit bureau determines the dispute is “frivolous,” it can choose not to investigate as long as it communicates that to you within five days.

What To Watch Out for When Seeking Credit Repair Services

Customers should exercise extreme caution when considering working with a credit repair company. If they ignore your questions, ask for payment before the service is delivered, or do not record its promises, turn around and look for another company. 

If you are looking forward to working with a credit repair company, consider all the warning signs and avoid potential scams. Anyway, it’s much better to confirm the accuracy of your own reports, since anything a credit repair company can do, you can do it much better.

Let Ebony Credit Solutions Help

At Ebony Credit, we offer credit repair services on flexible terms. Our process is easy, transparent, and affordable. Book an appointment to get started with us today.

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