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Is Legit Credit Repair Real?

Is Legit Credit Repair Real?

If you find yourself with a credit score lower than what you really want, it can be all too easy to jump at what appears to be the first chance to fix your credit. The sad truth of the matter is that many websites which post articles on credit scores or which have links to credit card companies often don’t have your interests in mind. Some of these ads might boast the ability to help you repair your credit instantly. There are many scams out there, but there is also such a thing as legit credit repair. The trick is to know how to identify which ones are which.

If you are able to do this and find a great credit repair company, you can avoid getting scammed and you can start saving thousands of dollars in the long run. It’s important to know how to distinguish the legit credit repair companies from the scams.

Debt management organizations

Credit repair agencies will help you improve your score in one of two ways. The first is by helping you manage and pay off your debt. The second is by disputing any negative items on your credit report which are not true.

First of all, repairing your credit score by managing and paying off your debt has no shortcuts. This is the type of credit repair that usually involves a lot of hard work and a lot of time. If you are truly serious about improving your credit score you might need to get better about managing her finances. These are the groups I can help you do that. Most of the debt management organizations are nonprofit which means that their goal is not to make money off you like other companies but to help you and educate you.

These groups encourage you to engage in self-help so that you can repair your own credit. This starts with understanding what makes up your credit score and what things build better habits and how you can repair your credit in the long-term. All things in life worth having will take a lot of effort and a lot of time. Nothing worth having is acquired easily.

What it’s like working with them

When you work with these companies, they’ll first want to get a sense of your comprehensive financial picture before they advise you. So, they’ll probably start by looking at your credit. And if your credit is really bad, chances are you have that. Effectively managing that that will help you to increase your credit score. These organizations help you set up repayment plans with your creditors. They act as a Coordinator between you and the creditors. They can help you lower any interest rates are facing and help you to change your total monthly payments.

Another perk to setting up a plan with a debt manager is that they might let you pay off your debt with a lump sum. When you pay off your debt with a lump sum, something that you can typically do if your bills have been sent to collections, you won’t have to keep track of dozens of bills or each different due date. Instead you can have it managed in one day.

For a lot of people, especially people who are faced with bad credit and a lot of debt, working with different companies, getting everything straight, sifting out old stuff from current stuff and figuring out what has to be paid when is exhausting and terrifying. When you have somebody that you pay to act as a Coordinator on your behalf, it takes away that fear.

Disputing negative items

Other credit repair agencies help you to dispute items on your credit report. These companies look over your credit report from all three of the credit bureaus and then they draft dispute letters to object any negative items. By law you have the right to dispute negative items on your credit score. You can dispute negative listings that you think are untimely, incomplete, unclear, unverifiable, or inaccurate. If the issue cannot be verified then it has to legally be removed from your credit score. One example of what an unverified thing means is, in an instance where one of your creditors when out of business but there’s no way for the three credit report euros to verify any item on your report from the creditor so it has to be removed.

Again, the nice thing about having agency represent you is that they are persistent. If these negative items are not removed immediately they will continue to dispute them in order to maximize the chances of getting the outcome you want. These companies will charge you an initial startup fee which can range from anywhere between $20 and $100 but the average fee is about $60. Some of them won’t even let you pay until you get results while others have a money back guarantee if you choose to no longer use their services.

Avoiding the scams

No matter which method you choose to improve your credit score, check the companies by name. Simply Google them and see if they have a long history, see if they have a lot of consumer feedback. Check and see if they have a Better Business Bureau rating. Take into consideration how you heard about the company. It was a late-night television advertisement it might not be reputable. If the company has been around for 20 years, chances are it’s a legit credit repair service.

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What NOT To Do To Increase Your Credit Score

What NOT to Do To Increase Your Credit Score

A bad credit record can cause multiple problems. With a low credit rating, you diminish your chances of being approved for new credit or loans. If you are approved, you are liable to face extremely high interest rates.

A bad credit history can also prevent you from being approved for a cell phone contract or from renting an apartment; there are also some jobs that require you to have a good credit record. The good news is that you can improve your credit rating, but it is going to be a slow and tedious process. There is a strategy to credit repair, and if you take incorrect actions, you can actually lower your credit score. Here are some tips on what NOT to do when trying to repair your credit history.

1. Apply for Multiple Accounts

Despite the fact that new credit plays an important role in keeping your account active, applying for too many accounts, particularly in a short time span, can affect you negatively. Every credit application made places a hard inquiry on your file, and having multiple hard inquiries can lower your score from this risky behavior.

2. Co-sign a Loan

Unless this is your son or daughter, or other close family member, and you are okay with potentially ruining your credit score for their benefit, do not become a co-signer. Even if you are confident that the individual will be able to make payments on a loan agreement, it is best to refrain from becoming a co-signer. When you vouch for someone else’s loan, the following occurs:

  • Their account is placed on your credit file.
  • In certain instances, it increases your credit utilization ratio.
  • If the individual is unable to pay, you will have to take responsibility for the debt.
  • If no payment is made, your credit will suffer.

Improving your credit is and should be an individual process; you can reduce the risk of further damaging your account by simply saying “NO.”

The bottom line is this. Repairing your credit can prove very challenging; the amount of time that it takes for you to recover is dependent upon the severity of the damage. However, you shouldn’t allow your current situation to have a negative effect on your long term future. Ensure your financial security by taking a proactive position.

3. Maximize your Credit Limit

When you max out your credit, your credit utilization ratio is affected. In fact, you don’t want your credit utilization ratio to be anywhere near 100%. If your ratio is high, it implies that you are a risk, and this will have a negative effect on your credit score.

To be safe, you should aim for a 25% or lower ratio. For example if your credit card limit is $5,000, make sure that you keep a balance of $1,250 or less.

4. Close your Old Accounts

Age is a virtue in the credit scoring world. While you may think that it makes sense to close any accounts that you are not using, this can actually damage your credit score as it will increase your credit utilization ratio.

For example, you might have two credit card accounts and both of them have a $10,000 limit. You don’t use one of the cards and it has a zero balance. The other card has a balance of $3,200. Since you don’t use the card with the zero balance, you choose to close the account meaning that you lose $10,000 in available credit which will raise your utilization score from 16% to 32%. This spike in your credit utilization will lead to a lower credit score. Keep your accounts current and active to assist in improving your credit score.

5. Spend without a Budget

Credit repair begins with budgeting! By creating a budget you are able to identify:

  • Saving and spending habits
  • Your overall progress
  • Areas that need to be improved

The above three points can hurt or help your credit depending on how they are monitored. In order to create an effective budget, you will need to keep track of your monthly expenses. Check out our guide on how to budget effectively.

6. Ignore your Credit Report

A study conducted by the Federal Trade Commission discovered that one out of five consumers had at least one inaccuracy on their credit reports. Even the smallest mistake can have a negative effect on your credit score.

People who know their FICO scores are at an advantage when it comes to obtaining the best credit terms for them. Rather than searching for ways on how to fix your credit report, take an active role and review your credit score on a regular basis.

7. Miss Payments

When you are trying to rebuild your credit, missing a payment is going to have a negative effect on your credit score, and when you are in the rebuilding stage you can’t afford to have such blemishes on your record.

If you can’t afford to pay off the full balance, make sure that you at least make the minimum payment. If you are unable to make a payment at all, call your creditor to make alternative arrangements. Your credit card company would prefer to make an affordable payment plan with you than mark your debt as uncollectable.

Try and Find a Quick Credit Repair Fix

Debt is like being overweight: you didn’t gain it over a short period of time and you won’t lose it over a short period of time. There are several companies offering a quick fix. Don’t fall for it! Ask yourself this simple question: “What can they do to improve your credit rating that you can’t do for yourself?”

On the other hand, if you do hire a credit repair company to assist you and they fail to deliver what they have promised, you can sue them. Legally, such companies are not permitted to charge you any fees until they have been successful in their claims. If you have made an advance payment and been cheated out of your money, you are permitted to sue them in federal court. You can either take this action alone or join with others to form a class action lawsuit. However, it’s best to prevent it from ever getting to that state. View our top reviewed credit repair companies here.

Final thoughts

While it is essential to avoid the above information when rebuilding your credit, the worst thing that you can do is to leave your credit as it is. Rebuilding your credit history is not an easy assignment, but don’t give up. Stick to your goal, be disciplined and allow positive momentum to assist you on your quest towards excellent credit.