It’s easy to leverage on a credit repair company or personally manage considering the focus on rebuilding your credit history. Assuming both choices of doing a credit repair, do not get into the temptation of fixing your credit report blindly. The best option of progression is to begin with the fundamentals before performing the necessary procedures. Learn about the pros & cons of credit repair.
Pros of doing a credit repair
Seating on fence deciding whether to approach a credit repair company or to take up the responsibility of doing yourself? Take this opportunity of learning the advantages of credit repair.
1. Potential to boost credit score.
Many consumers think that a credit repair guaranteed a complete increase in credit score. False! The reason behind a quick fix is to improve the probabilities of bolstering your financial productivity, thereby generating interests among lenders to finance your credit portfolio.
Here are some useful tips in getting an adrenaline rush to your credit scorecard.
- Purchase a credit report: One good way is to buy a credit report from anyone of the 3 credit bureaus – Experian, Equifax, & TransUnion – initiating the first step in looking into your report card, you’ll expressed interests in understanding more about your current financial situations & gradually finding means to improving your credit score.
- Do a “debt snowball” technique: Additionally, it’s prudent to service off small unpaid debts first – receiving savings on interest rates paid to credit card companies & ideas in shortening the lifespan of longer term liabilities.
- Increase your rate of savings: An indirect method in improving income savings to repay your outstanding loans at faster pace – creating a positive financial habit in repaying debts within stated deadlines & get better interest rates in the long run (after improving your credit score).
Evidently, these financial tips cannot work without some effort at your end. Do not indulge in dangerous activities even after observing the above-mentioned ideas for credit repair.
At the beginning, it’s difficult for you to boost your credit score. The reason behind being rejected by local financial institutions as well as potential lenders is due to the drastic changes seen in your credit report – leading to an economic decision in reducing your rate of bank approvals. A boost is not of permanence relationship too. You’ve to continuously create new payment history in an attempt repair bad credit while repaying in a timely fashion.
2. Leverage on a credit repair company’s network.
Finding difficulties in securing a mortgage loan, obtaining a credit card, or getting a personal loan, chances are your credit rating is not good. There’s no universal way of calculating your credit rating by local agencies. Different creditors used their proprietary credit score calculations to predict your risk of delinquency as well as rationalizing their decisions in adjusting their financial products, catering to you via the best credit utility rate.
Here are some powerful networking tools to be established using your credit repair company’s connections:
- Experienced credit repair bureau’s & creditor’s talks: A free credit bureau report is insufficient to justify your efforts; a credit repair company has the ability to communicate effectively with local credit bureaus & your creditors – securing the most probable debt-financing packages & maximizing your chances of getting approved.
- Outsourced your time & efforts: In doing so, you’re optimizing your time & efforts in putting to good use – doing your best at what you are good at (generating income to facilitate debt repayments) while letting the credit repair agency does what its best at (removing bad information & tax lien deletion).
- Broad spectrum of credit fixes: With the vast credit repair info laid out before you, this might be an opportunity to fix bad credit & increase your financial knowledge – to the fullest in obtaining the highest probability credit repair.
Interestingly enough, you’ve the powers to leverage on nationwide key knowledge as well as being connected with relevant corporations – Experian, Equifax, & TransUnion – and getting prepared for unforeseen circumstances.
Most consumers disagreed on using a credit repair company’s network. It’s a double-edged sword for many people considering the fact of verified claims from creditors. So long as you’re well-prepared in proving your innocence, waiting a period of time (approximately 1-2 years), the bad information shall gradually deplete itself & you regain confidence from potential lenders.
3. An opportunity to improve financial standing.
Financial status ranging from delinquency to low risk status is an important indicator for your lender to make a financial decision in loaning out money. If there’s an opportunity for you to enhance personal financial health, the best option is to adopt prudence in doing an aggressive credit repair.
Here are some of the best credit repair strategies to observe in doing an overhaul:
- List all negative information in the credit report: When is the right time? Now, proceed to scrutinize your individual info and make sure everything is being penned down for potential dispute cases – your creditor’s mistakes should not be your debt burdens or giving you any financial distress.
- Do a soft credit check calculation: Today, an online free credit score assessment is available and you can too inquire for a credit check from a credit rating agency – either way does the “job” right.
File for the appropriate dispute or discrepancy: It’s imperative to only mention the key factors affecting your credit score; invalid credit info, a creditor’s error, mistake made by local credit bureau, or expired bad debts within the report card.
Alternatively, you may call a credit repair agency to assume the responsibility of consolidating unpaid debts & bad information, thereby connecting with the relevant creditor and bureau’s officers in initiating a dispute. In doing so, there’s a plausibility that falsified info can be strike off quickly before further damages could possibly harm your credit score.
Credit repair is not an easy task. It demands great efforts and patience at your end, both debtors & creditors alike. The main focus is to undergo the hassles to clear up bad information while ensuring that you are not the subject of identity theft or fraud. Do not be despair if any of your lenders rejected you as the next topic addresses this financial concern.
4. Lender’s choice of debtor.
Are you ready for a lender to choose you? If you’re doing credit repair to be inside the radar of your lender, it’s time to fix some bad debts and prepare a cleanup in your credit report. Of course, the problem as a debtor is credit control.
Here are some probable tips in increasing your chances of being your lender’s choice:
- Prove your financial competence: All actions, no talk. Justify your monthly wages for your lender to rebuild their confidence – an increment in annual wage growth definitely entices any financial institution to increase your credit limits.
- Pay up on time: No debtor can emphasize the importance of fixing unpaid debts in a timely manner – lowering your used credit utility ratio while enhancing your overall financial standing.
- Terminate unused credit lines: Instead of hogging up five other credit lines, one good way is to terminate all & wait patiently for the next useful line of credit – bank overdrafts, cash advances, or payday loans. Do a balance transfer to consolidate all credit card debts as well.
Obviously, the more you pay up, the higher the chance of obtaining a bank’s approval in getting a home, buying an auto, or better credit card interest rate. It’s a natural instinct of your creditors looking for ideas to approve your credit report score. Do not be confuse with borrowing more money to burst your existing margins.
A lender, a financial institution, a bank, or a credit card company, does not want to assume unnecessary risk in borrower’s default as they’ve enough liabilities that are non-profit generating. This calls for wisdom on your end to maintain a healthy gearing ratio hence “forcing” them to select you and put your credit portfolio under review – lifting up your opportunities in securing a new mortgage, a new auto, or apply for a new credit card.
5. Sufficient time to focus on increasing income.
Let’s say you’re really panicking on the various ways to perform a high quality credit repair yet in an affordable manner. For a start, finding a new job or seeking an increase in salary does help in rebuilding your credit history. In an indirect way, you are effectively amassing more income to repay off unpaid debts. This is not a long-term solution as piles of outstanding bills do generate interests.
Here are some of the highly proven ideas in lowering your total liabilities:
- Get a freelancer business: Does dropshipping works for you? Set up an online business to sell goods to someone’s doorstep. It’s a unique method of bringing convenience to consumers while generating a steady affiliate income for your household.
- Find ways to lower your taxes legally: After a tight taxation policy, it’s time to withdraw some claims by proving your current bad credit score report – the agency shall negotiate with you on either a deferred tax payment account or rebate back to your current and savings account.
- Slowdown your hectic lifestyle: A busy day entails many economic activities, reducing your financial productivity in credit repair but increasing your daily spending in entertainment & productions – counter-effect in your plumbing endeavor.
Finally, you can see the difference between earning a lot without personal savings and decent wage scheme yet loading up savings account patiently. The above 3 ideas might spur some creativity in building up your personal finance. Good news is that these 3 methods could be implemented immediately as well as not requiring any startup capital (including the first idea of subletting goods and renting/selling out to consumers).
Do you have spare time to work overtime? Regardless, any amount of diligent efforts in generating excess income is considered to be a good headstart. There is no wrong way in fetching higher valuations to your credit repair but it’s not a big deal to continue servicing mortgages so long as the smaller debts are being cleared out swiftly (debt snowballing technique).
Good to know about pros of a credit repair in year 2018
What good do you get in doing an aggressive credit repair? Many consumers understand the advantages of performing an immediate credit fix but wanted an outcome that is satisfying to everyone. Wrong! There’s no such thing as pacifying the entire credit world. You’ve to work alone in finishing up the debt payments without financial assistance from anyone.
Cons of credit repair
Is it scary to face the reality of global credit crunch since 2011? No, getting into a mortgage foreclosure, a car repossession, or implicating your family members in loss of employment, is the most fearful emotion ever. You’ve to be prepared for sudden economic upheaval by having a contingency plan such as emergency funds and income-generating assets to tide through.
1. Risk of wasting money & getting sold credit repair packages.
Recently, the U.S organization is clamping down on insidious so-called credit repair franchises that are operating without proper financial credence. Are you part of the scandal that is about to unfold? If yes, the risk of not reclaiming back your money from these franchises is a real problem.
Observe these practical ideas in protecting you against tough local credit repair agencies:
- Never assume payment beforehand: Payment is always done after the completion of contract due. It’s illegal to pay upfront before the service or any point in time when a credit repair company is rendering the service – remembering that you’re a client regardless of your existing bad credit score.
- List down items in black & white contract: No one is legally responsible for promises that aren’t stated in your credit repair contract. It’s not the duty of a credit bureau officer to personally your credit dispute that has not been listed as part of the negotiation agreements.
- Demand a receipt from the agent: In order to prove a service delivery, a receipt is expected from any agencies dealing with your credit fix. Do not accept any service that doesn’t issue an invoice as it might be a shady credit repair business.
As anticipated, you’ve to adopt a proactive attitude in identifying the right credit repair companies and this is the first disadvantage of all. There is no way to rationalize your poor decisions when lawyers appeared at your doorsteps. It is definitely going to be heavy fines or a jail term depending on severity of your financial mishap – sometimes not exactly your fault or beyond your credit control measures.
Do you think signing up for multiple packages in doing credit repair or loss of money is terrible? Think again, the risk of facing legal penalties can be a disaster too! Do not attempt to apply a credit check using a credit card first. Be sure to call up the credit repair company and demand queries to be answered in a convincible manner – not sales pitch.
2. Info leakage to third-parties.
How about facing your personal identity info being leaked out? This is going to be a calamitous disaster again! Also known as identity theft, or stealing of identities, a major fraud could be filed against you – yes, you’re 100% responsible for any revealing of information to the public even if it’s not you who (accidentally) leaked any info that is available for sale now.
Observe these safeguarding measures to prevent you from being a victim of identity theft:
- Invest in credit protection guard: One way is to invest in insurance. Be it a 360 credit repair guard, a 90-day debt fix scheme, or any 365-day credit repair service, an insurance is almost obligatory. The probability of credit info leakage is about 78-90% for most U.S. consumers as well as U.K. residents.
- Purchase a credit report from an accredited seller: If you’re intending to buy a credit report, do it via 3 credit bureaus – Experian, Equifax, & TransUnion – instead of unknown credit scoring agencies. Reason being, put your trust in the hands of local agencies instead of other strangers – pricing wise is clearly indifferent.
- Regularly check your credit report: Fearful of being victimized of identity theft, why not adopt healthy credit checks on a monthly basis (or twice) – lower the risks of receiving a shock from local bank’s mortgage dealer on a new mortgage re-financing schemes or paying for unpaid mortgages after 12 months.
Theft of individual identities is not an uncommon issue. Many U.S. consumers experienced at least once in attempted identity theft fraud, knowingly or unknowingly. It’s therefore crucial for you to continually update your credit info at local credit bureaus and your creditors.
Once there is a risk of facing potential credit file leakage, you’re in critical danger of getting legally involved. Should this not give you a fright, try not being able to obtain a bank’s approval on personal loan, mortgage application, or a new credit card for at least 12 months?
3. Empty or false promises from a credit repair company.
Have you ever been cheated out of a credit repair? It could be as simple as an empty promise, a false information, or removal of tax lien – anything that has not been promised to be completed in a responsible manner. This is also known as cheating via a despicable method that is not part of a legal clause.
Observe the following useful tips in avoiding “shell” promises of a credit repair company:
- Contact relevant credit bureau agency: A rough idea is to call up a local approved agency on checking the records using the name of the credit repair company – a simple inquiry on the verification of your credit repair choice.
- Locate the actual place: Many consumers merely searched for “Local credit repair companies near me”. Phrases or keywords like these cannot prove the locations of your intended credit fix companies.
- Difficult legal terms in a credit repair contract: A contractual agreement should be easily digested by both parties. When the application form is handled over to you, and not clearly elaborated with queries not being answered, it’s a red flag for you to run for the door.
Evidently, there is no way a credit repair agency can hide details from you. Although you’re always behind the scenes, this business provides you the legal rights to understand the entire flow of your credit repair.
A reputable company has to observed strict debt management policies in a transparent manner. For those who were overwhelmed by current financial conditions, it is wise to seek help from a relative or a friend in finding an aggressive credit repair business, not you whom did not have a clear state of mind to even consider the risks involved.
4. Slow in removal or deletion of bad information.
Once a contract is inked, you’re sure to expect a quick response from the assigned officer in removing bad information or contacting you on relevant info needed. It’s not difficult to see whether the agent is doing his job well, after a delayed response & disputes being filed from your creditors.
Observed the following tips in understanding more about the process of a credit repair:
- Pay to not delete: Assuming that you’ve tasked an agency to remove a bad information such as dated records, the agent has been delaying in extracting dire info, chances are the information is beyond the agent’s control or something is amiss – you don’t pay to delete but do nothing at your end.
- Removal of negative objects listed: When the officer is trying to push away certain items without helping you to remove your bad debts, you’ve to pull out the contract and review the entire clauses again – failure to obtain retrieval of critical credit repair info is against the law!
- Taking own sweet time in managing a bad credit: Although most credit repair businesses don’t progress like a turtle, there’s certainly some “black sheeps” seating down and waiting for the moon – slowing removing your bad information while asking for time extension payments.
Sometimes, it might not be the fault of any party (debtors & creditors) but the need for additional time is a cost to carry indicator. Your lenders might get upset on the slow progression & poor financial mobility in ridding simple expired bad debt items in your credit report, thereby affecting your overall individual credibility – priceless here!
A slow movement in your credit report caused a massive loss or decrease in your personal credit score. It’s been proven time and time again that a lower credit score faces higher rejects from financial institutions – under 609 credit score.
5. Retrieval of positively verified information.
One mistake an inexperienced credit repair company made, normally cheaper options or heavily discounted packages, is to wrongly extract the correct credit info from creditors and ended up with a failure in removal of bad objects listed. One wrong move may cause your whole credit repair application to be flushed down.
Here is an appropriate credit checklist to determine the correct actions:
- Hire an experienced credit repair officer: The primary objective is to remove bad objects in your credit report, not the other way round of verified listings that boost creditor’s confidence in negotiating bad interest rates with you.
- Reviewing of judged items: Firstly, you’ve faced judgments on all unpaid debts & mortgage claims. There is no reason behind reviewing of such bad items anymore.
- Exercising patience in a credit repair process: Most customers expected a 90-day credit repair service or 360-degree credit protection insurance. Nonsense! No one can promise or guarantee an approval of quick fix at all.
Maintenance of positively verified information is costly. Do not try to “game” the system by talking too much. The reason why some clients got rejected is because of accidentally revealing verified data to a credit bureau and finally getting the red light of being a bad debtor.
To handle an accidental claim is suicidal. An experienced agency always list down your negative objects and discrepancies before sending over. An aggressive credit repair company often avoids easily detectable errors at your end, initiating a dispute for only bad information or errors made by the bank. It’s the highest probability for you and worth the penny spent in hiring them.
Good to know about cons of credit repair in 2018
Knowing the variances of cons is obligatory. You’ve to be on guard when implementing credit repair especially with the help of an agency. There’re cases of information leakage, identity theft, and credit card frauds happened before. Do not be a victim of such frauds as the information listed here often covers a broad spectrum of stolen identities & strategies to overcome the disadvantages of credit repair.
Quote of the Day: “Who is better than me? – KIG Hall [2013-2018]”
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This article was originally published on February 17, 2014. It has since been updated.