To hire a credit repair company or not to, that is the question. A low credit score signals it is time to invest in credit repair. But can you do it alone? Do you even have time to? Should you outsource your credit repair to a reputable company?
These questions and more will be answered in this article.
Credit and Credit Repair Overview
Credit is your ability to obtain products and services before paying for them, based on the trust that you will make payment in the future. When your credit is damaged, you’re less likely to get good interest rates or even be approved for lines of credit.
When credit cards became prevalent, credit reports were created to communicate an applicant’s likelihood of repayment to a potential creditor. Credit reports have completely streamlined the credit application process to the degree that we can open new credit lines almost instantaneously. It’s pretty amazing.
Most likely, you were never taught the best practices in grade school for maintaining good credit. You might have received a credit card application in the mail and had to learn about credit through real-world trial-and-error.
Even worse, you may have had to deal with your personal information being hacked and your credit accounts becoming compromised. When this happens and things go south, you may find yourself in a position where you feel stuck.
No entity will issue you credit. Your new car to get to work? Not happening. Your dream house? You can’t get a mortgage.
In this day and age, credit is extremely important for all adults living in America. If your credit is damaged, you have two options: do nothing about it or take the necessary steps to repair your credit.
Enter the credit repair process. The way to improve one’s credit standing.
When deciding how to proceed in your credit repair process, there are two metrics to consider: process and results. What does the DIY credit repair process look like and what can you expect the results to be? The same will be discussed about credit repair companies. Is the process worth the results?
Hiring A Credit Repair Company
Hiring a credit repair company can really take a load of effort and worry off your mind. They are very good at getting customers through the door with free consultation offers, estimates of higher credit scores, and really slick technology to keep you in the loop.
But it’s a little like shopping for a car: it’s best to go out and kick some tires and test drive several cars around the block before you make that new car purchase.
There are four questions you should consider when it comes to hiring a credit repair company.
1. Do you have the time to wait for their credit repair efforts to take hold?
If you have a few dings in your credit file, results can occur as soon as 90 days. If you have several collections, late payments, or a bankruptcy on your credit report it could take up to a year to try to clean those up. And rarely do all negative items get removed. Credit repair is not a quick fix. Don’t believe what others may tell you that run contrary to that truth.
2. Do you have the funds to pump out $80-$120 per month for up to a year?
Hiring a credit repair agency requires an investment. Plan on a minimum of $500 over 3-4 months or as much as $1,500-$1,800 over 12 months. Yes, you can cancel at any time so you do have some control over the total costs.
We DO NOT recommend working with companies that charge a set fee for every deletion. They will attack the low-hanging fruit first and pretty soon you’ll be handing over $800 for very little improvement in your credit score.
3. Do you need some hand-holding or do you want to turn it over to a large, national credit repair service?
There are a lot of small, local credit repair agencies in your area. The benefit to that is that you can schedule meetings to hold their feet to the fire and get your questions answered. The downside is that many mom-and-pop shops aren’t true credit repair experts. They rely on the dispute software they licensed from companies such as DisputeFox or Credit Repair Cloud.
On the other hand, large national companies such as Lexington Law, Credit Saint, and Sky Blue have legal experts guiding the process. They tend to have a finer point to their dispute methods and they all have online tools that allow you to monitor the process.
The downside to large national firms is that you can sometimes feel lost. It’s rare that you’ll ever speak to someone in person outside of an initial consultation and the dispute process itself can seem like a mysterious black box. And when results don’t happen, you can’t go marching into a local office to meet with your account representative.
4. Have you compared reputable credit repair companies to know the costs and the process?
You really do need to do some research before you make a decision on which company to hire. Meet with local companies. Read the reviews and online information about both local and national firms. Most of all, commit not to get pressured by special deals or promises. Make the choice that is most logical and thoughtful for you.
Our Summary: Should You Choose A Credit Repair Company?
Simply stated, hiring a credit repair company is time-effective but costs money. A credit repair company will analyze your credit reports and write your letters of dispute, all behind the scenes. They have a well-defined process and follow it.
They do not procrastinate or waste time. Reputable credit repair companies are specialists on your side. They know the law. They know credit card companies, banks, and collection agencies. And they know your rights as a consumer.
There can be a sense of relief by hiring out all the work it takes to fix your credit, but our perspective is that credit repair companies don’t have any inside angle or secret sauce not available to do-it-yourselfers.
We do not believe, based on hundreds of comments about the subject from our Community Forum, that credit repair companies are not enjoying a level of success at getting negative items removed any more than normal do-it-yourselfers. And, importantly, they are not as passionate about improving your credit as you would be if you were doing it yourself.
When it comes down to it, the people we see hiring credit repair agencies are those who have the funds but don’t have the time to conduct the credit repair process themselves.
Why Consider DIY Credit Repair
Do-it-yourself credit repair is virtually free. The cost, however, will be your time. And a very steep learning curve. Here’s what you should think about and expect in the DIY credit repair process.
1. Do you have the time to wait for your credit repair efforts to take hold?
As mentioned above, there is no quick fix here. If you’ve been sold on a sudden and dramatic improvement in your credit reports and scores, you’ve been sold a false dream. The DIY approach also depends on your own learning curve and your attention to holding to certain timelines as outlined in the FCRA.
2. Can you endure the mental gymnastics the process will require?
Sending out those first dispute letters is exhilarating and empowering. Getting letters back about 30 days later from both creditors and the credit bureaus stating that they reviewed your case and have verified that the negative information is correct? Not so much.
And so goes the mental highs (a negative item is removed!) and lows (your fourth attempted dispute letter to the credit bureau was returned as “verified”). You have to have a positive attitude about it and not get discouraged.
Most people drop out after the first round of disputes. They either had unrealistic expectations, found out the time investment was too much, or couldn’t deal with the rejection.
When you opt for a credit repair firm, you don’t have to deal with much of that negativity. It is worth noting, however, that some people get a positive charge out of holding creditors and credit bureaus responsible to the law.
3. Are you willing to engage in a lot of research to teach yourself the process?
There is no shortage of information about credit repair on the internet. But a big chunk that that information is misleading and wrong. The reason (we believe) CreditInfoCenter.com has thrived for over two decades is that we have provided accurate and timely advice on the topic of DIY credit repair.
We’ve recently enhanced our search function on the website to provide visitors with more focused results in their efforts to learn about credit repair. But let’s be clear, it will take several hours of study and reading to feel absolutely comfortable with sound credit repair strategies and tactics.
We also feature our Credit Repair Community Forum. You can search topics there and ask questions of community members. They’ve been through what you’re currently contemplating.
4. Are you reasonably organized?
When you send dispute letters, you’ll be asking for a response from the creditor, collector, or credit reporting agency. If you have a lot of letters to send, you’ll be getting a lot of mail back. And those responses need to be organized so you know which letter to send next. In other words, you need to have a system. Your DIY efforts will suffer without some modicum of organization.
5. Is procrastination an issue for you?
There is a certain cadence to the letters and subsequent responses you need to adhere to when disputing your credit report. If you put off compiling and sending letters because you “weren’t in the mood,” your DIY efforts will suffer.
Non-Profit Credit Counseling Agencies
To support you, the FTC mandated the existence of non-profit credit counseling agencies. These agencies will review your credit history and offer guidance. Some will even deep dive with you into your reports to help you identify the items to dispute.
These agencies are a fantastic resource for DIY Credit Repair. They won’t do everything for you like a credit repair company would, but they offer valuable insight and guidance.
There are numerous credit counseling agencies across the country. Some of them charge a minimal fee for their services. Some offer completely pro-bono consulting work, including debt reduction and foreclosure assistance.
The United States Justice Department maintains an excellent list of non-profit credit counseling agencies on their website.
Our Summary: Should You Choose The DIY Credit Repair Option?
Just because DIY credit repair is practically free, doesn’t mean you should choose that option. We advise you to look at the time you can give to the effort along with your mental demeanor toward getting letters of rejection.
But if you really want to learn everything about your credit report and want to know the details of all the protections you are afforded, maybe this approach is right down your alley. It takes a certain doggedness and determination, but the rewards can be amazing.
In fact, if you stick with it you’ll come away from the experience with a certain confidence about your financial future because you took the investment of time to learn about a subject with which too few people are familiar.
Credit is a powerful financial tool. With power comes responsibility. When your credit report is reflecting poorly on your trustworthiness, it is time to take action to correct your situation. Here enters the credit repair process.
The credit repair process always begins with requesting your free credit reports from Experian, Equifax, and TransUnion — the three major credit reporting agencies. You can review your reports solo, with the help of a pro-bono credit counseling agency, or outsource the work to a credit repair company for a fee.
Both options have their positives and negatives that have less to do with outcomes and more to do with the approach that seems to meet your needs most.
And what should you expect? Results vary. Widely. But our rule of thumb is to expect a 50-80 point increase knowing there are a ton of variables when making that statement. If your credit score is 550, don’t expect a score of 785 in 6 months. It probably won’t happen.
One thing is for sure: it’s always a good time to manage and improve your credit.