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An Insider’s Look to Working with Credit Rescue Companies

Posted in Borrowing Money on August 3, 2020

If you have poor credit, you certainly aren’t alone. The infographic below shows what companies consider to be a good credit score. Unfortunately, many Americans today find that theirs fails to match up to a rating of good or higher.

The chart above shows that poor credit scores are especially common in those under the age of 50. Yet, if your credit score is poor, you may have a difficult time keeping up with your expenses, and qualify for credit cards, or loans.

It’s no wonder then that so many people turn to credit rescue companies to improve their credit.

What Is A Credit Rescue Company?

Credit rescue or credit repair companies review your credit report for a fee. They then address negative items with credit bureaus for you. While it may sound like an easy option, it may not be the best choice. In fact, it’s surprisingly easy to do this independently. This is why you should weigh the costs of paying a company to take responsibility versus doing it yourself.

How Does a Credit Rescue Company Work?

A credit rescue company begins by asking for your credit report from the three main consumer credit bureaus. It then reviews those reports for any errors, such as those outlined below.

They also look for derogatory marks. These include charge-offs, bankruptcies, and tax liens.

Should it spot errors, it can then develop a plan. The company negotiates with your creditors and arranges for your creditors to remove those items from the report.

The credit rescue company might also suggest you apply for new accounts. This will help you to add more positive information to those reports. However, if you’ve struggled with credit before, opening new accounts might not be a good idea.

The Cost of Using A Credit Rescue Company

How much you pay a credit rescue company depends on which company you choose. However, all must follow certain rules.

Some companies charge a one-off fee. Others charge for every derogatory mark they remove from your reports. And there are others that charge monthly fees. Some may also require you to pay a fee to access the credit reports or setup fees.

You should, therefore, think about the amount of work your credit reports will need. If you only have a few negative items, it may make more sense to do the job yourself. Simply apply the cost of the fees you would have paid toward paying down your debts instead.

Potential Issues with Credit Rescue Companies

If you choose to use a credit rescue company, you need to be cautious. Not all companies are trustworthy and reputable. Even those that are may not offer suitable services for your situation. You can also save money by disputing incorrect information on your credit report yourself.

How Can You Repair Your Credit Yourself?

The above chart shows the things that could be helping or hurting your credit score. There are several things you can do to improve your credit independently. These include:

  • Reviewing your credit reports to spot errors
  • Disputing any incorrect information yourself
  • Taking steps toward building up your long-term credit

The above infographic shows some of the steps you can take  to fix your poor credit score:

Pay your bills on time – Payment history represents the biggest impact on your credit score. Set up autopay on recurring bills, such as car payments or loans. Change the due dates of payments with creditors to dates that you can spread out across the month. If you’re struggling, be upfront with your creditors and ask about alternative payment options.

Pay down your debts – Don’t use more than 30 percent of your cards’ credit limits and prioritize paying down those balances. If necessary, take out a balance transfer credit card.

Avoid any new hard inquiries – Don’t apply for any new credit sources. If you try to borrow money from several sources, you may look like a bigger credit risk.

Work On Your Own Behalf

Although it can be time-consuming, it’s often better to improve your credit score than to hire a company. Afterall, you can save money in the long-run.

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