Consider major or minor expense amounting to unwanted cost – even removing inaccurate information – that depletes your cash reserves in a short span of time. The cost of hiring a credit repair company for services can be challenging, at times demanding to the wallet from hundreds to thousands or dollars.
What is the Credit Repair Organizations Act (“CROA”)?
Credit Repair Organization Act (CROA) – is a federal law effective to govern credit repair service companies. On April 1, 1997, the CROA is enforced to protect existing & new consumers from credit repair scams. How does the CROA protect me from being scammed?
With effect, a company has to observe the following when operating credit repair services:
- No advance payment or undisclosed fees to be collected before completion of services.
- Professionally written contract stating all services to be rendered, full disclaimer and clauses for payment. Under the law, consumers can withdraw from the contract before 3 days (in any circumstances).
- Do not employ illegal/unethical practices such as identity theft or misleading credit reporting companies on your existing credit accounts.
- Overpromising you on certain terms; money-back guarantee, rebate of incomplete credit repair or any other forms of falsified claims.
- Forfeiture of rights for intervention of Credit Repair Organization Act.
In dealing with such terms & conditions, you can report the company to the Consumer Financial Protection Bureau (CFPB) and file a complaint to Federal Trade Commission (FTC). An agent will attend to the request and rectify the issues.
Note: Do not take matter into your own hands as certain clauses may lead to jail terms.
How to “Fix” my credit?
How fast can I fix my credit – there is no quick fix in credit repair. Information entered into a credit report (such as late payments and delinquencies) will remain for 7 years up to 10 years. However, you are empowered to take steps in building a better credit history and improve credit scores.
How do I check my credit report?
Step 1: Obtain a free copy of your credit report. Experian, Equifax or TransUnion. You can buy additional credit reports.
Step 2: Learn how to read an Experian credit report. Also note on why Equifax freeze a credit report. Check for verified (correct) information.
Step 3: Identify any discrepancy, you can file a dispute. If you found an unknown activity (such as foreign transaction), it could be a fraudulent activity.
Step 4: Call a credit bureau. 3 major credit reporting agencies are available to listen to your needs. Identity theft is a crime. An assigned agent will help you.
Note: Never assume all reported information is correct, report any information you felt is incorrect.
How to improve my payment history?
A payment history – one of the core indicators of Fico scoring models. Collections and bad marks reduce your scores. Late & missed payments deter creditors. Negative information remains in a credit report. Paid liens up to 7 years. Unpaid liens a lifetime. Other bad items generally reside on your credit report for up to 7 years. Bankrupts under Chapter 13 retain for 10 years. Think wisely.
Recent debt has more emphasis than “old” unpaid ones. Most scoring models take into consideration for size & duration of debt. Bigger debt (such as a mortgage or auto loan) negatively impacts your scores. Any missed payments (a few weeks ago to three months recency) badly influences your scores. Moral: Don’t miss a payment and your accounts will respond with a positive impact on your credit scores.
Note: Ask a credit counselor to set up a debt management plan (DMP).
What can I do to rebuild a credit history?
Credit utilization ratio – an indicator for lenders to understand how much you owe as opposed to available credit limits. A credit utility rate or balance-to-limit ratio has an equation: current liabilities (credit card balances etc.) divided by total credit (a combination of all available limits).
Overspending on credit utilization ratio hurt your credit scores. An acceptable rate is under 30% of your credit utilization rate. For instance, for a $10,000 credit limits across all credit cards, it’s recommended to keep total balances under $3,000. Keep your credit utilization rate as low as possible.
Repay a credit card debt. One common problem is on accumulation of credit card bills and paying the minimum sum. It is not recommended to do so. Instead, paying off account balances helps to raise credit limit. Try not to open a new credit account as a short-term strategy. You can use it to temporarily boost your credit scores for certain benefits, however.
Note: Excluded info in the equation is long-term liabilities & over-the-cover limits.
How do I get more Options for credit repair?
Reached out for credit assistance – an alternative to fixing your credit by yourself. One way is to contact a reputable credit counseling service. Most credit counseling sessions are set up by non-profit organizations (at a fraction of credit repair cost). More information on choosing the best credit counselor could be found at National Foundation for Credit Counseling.
Debt Management Plan (DMP) helps to negotiate for lower monthly payments. Associated creditors & lenders are noteworthy of credit counselors. Generally, you’ll remit one monthly payment to the DMP and automatically segregates to different accounts you owed. It is on a renewed term, no negative or positive influence on your credit history.
Alternatively, you can invest in a credit repair company. Professional services provided can help reduce financial stress. A credit repair specialist builds a plan for you to observe. An example is a 4-tier credit dispute & negotiation process. Credit repair attorneys could further enhance the overall credit repair service.
Note: You’ve the choice of opting for credit counselors or credit repair agents – Your Choice.
What are the Ways of fixing my credit fast?
Fluctuations on my credit report – a good sign of showing that your credit scores are progressing. Under the law, credit reporting agencies have to respond within 30 days after receiving your dispute. Creditors will take some time to complete the request and report an updated status back to credit bureaus.
Having negative information on your credit report is bad. Lenders do consider bad items stored & other factors (such as low credit scores and charge-offs) before determining whether to do business or not. A good debtor almost always cleans up a credit report. It reduces interest rates and get better terms of financing.
Bad marks entered in a credit report remain for 7-10 years. The public records let lenders know your existing financial conditions. It leads to better decision-making process in determining interest rates & delinquency risks. Going forward, demonstrate good credit management in paying off debt on time. A positive credit history helps to improve your credit scores.
Note: Always check the terms of financing, observe religiously and enhance your reputation.
Good to know about cr: how to “Fix” my credit
Credit repair scams posed as a threat to the society. Be careful when you’re dealing with “shady” business firms, be it credit counselors or credit repair officers. Always look for scam alerts in the contracts & negotiation processes. Never make advance payments. Do not alter your identity or purchase a new customer profile (not yours). Identity theft is a crime. Invest in a credit repair shield plan. Continue to learn more about fixing your credit (yourself).
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Quote of the Day: “Always learn from the wisdom of age – KIG Hall [2013-2018]”
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» What you need to know about a credit repair: Knowledge is freedom!
» Scam alerts in a credit repair: How to I prevent identity theft & scams?
This article was originally published on April 01, 2014. It has since been updated.