Credit Restoration Worth It
You want to improve your credit score but you’re not sure if a credit restoration service is worth it. Here’s the truth: It can be, but only if you choose a reputable credit repair company. The industry is highly regulated and must follow strict federal laws designed to protect consumers. In fact, the Consumer Financial Protection Bureau (CFPB) recently sued a credit repair company that charged customers for services they didn’t deliver.
Credit Restoration is the process of disputing inaccurate negative information on your credit report. It can lead to a higher FICO score and a more positive credit history that lenders will see when you apply for loans or new cards. Credit repair companies focus on the specific financial issues that are affecting your credit score, such as negotiating settlement offers with creditors for debts you owe.
The goal of a credit restoration service is to clean up your credit reports by disputing errors with the three major credit bureaus, Experian, Equifax and TransUnion. You have the right to dispute any inaccurate information on your credit report and the agencies must investigate the claim and delete it if they find it’s erroneous. However, this is something that you can also do yourself at no cost by submitting a dispute online or by mailing each credit bureau a letter of dispute.
Is Credit Restoration Worth It?
In addition to removing inaccuracies from your credit reports, some credit restoration companies may also work with creditors and lenders on your behalf to try to get past-due accounts current or lower your credit utilization ratio, which is the amount of debt you have compared to your total available credit. Generally, you can lower your credit utilization ratio by paying down your outstanding debts and keeping balances low.
A good credit restoration company will do all of this for you and often at a lower cost than you could manage on your own. Many of these companies also offer extra features with package upgrades, such as free credit score updates and writing cease and desist letters to debt collectors on your behalf. However, most of these extra services aren’t likely to be worth the additional charges, especially considering you can get your credit report for free and can write cease and desist letters yourself for no charge.
One important thing to remember is that no matter how much a credit restoration company may improve your credit, they can’t remove accurate negative information from your credit report. If you have a late payment or other negative mark on your report that is actually correct, it will remain on your report until it’s legally removed or you pay the debt.
If you’re not sure whether a credit restoration company is worth it, you can start by checking the CFPB website to find out how many complaints they’ve received from their customers. If you do decide to use a credit restoration service, it’s best to go with one that has a solid track record and is willing to offer a money-back guarantee in case they can’t get misleading items from your credit report within 90 days.
