Credit repair is the act of restoring or correcting a poor credit score. To hear Steve Weisman tell it, credit repair is part police work and part legal experience. Although it may not qualify as an episode of NCIS, Weisman, who is a leading lawyer, university professor and one of the country's leading experts on cybersecurity, identity theft and scams, paints a picture of a process similar to a criminal investigation. In this case, the crime involves false information that harms you and your credit.
Weisman, author of 50 Ways to Protect Your Identity and Your Credit, accessed an exclusive interview with Investopedia on the topic of credit repair, including how to find and hire the right credit repair agency or even whether to try to repair your credit on your own. Credit repair is the process of hiring a company to correct your bad credit by removing inaccurate and negative information from your credit reports. With a positive title like “credit repair”, it's no wonder people fall prey to fraudulent practices by credit repair companies. They agree to “fix your credit by disputing the negative elements of your credit report”.
They say they can delete any item from your report, but only real inaccuracies can be deleted permanently and you can do it yourself for free. Credit repair companies make sure you know when these items are recalled, but they don't tell you when they reappear. If you find incorrect information, you can file a dispute with the credit reporting agency in whose report you found it. You should also directly contact the lender reporting the incorrect information and ask them to correct your records.
It's hard to say for sure how long it takes to rebuild credit because everyone's credit history is different. Before you apply for a loan or open a new credit card account, consider the effects it could have on your credit. The Fair Credit Reporting Act (FCRA) allows you to file a dispute as long as you disagree with any information that appears on your credit report. If your debt feels overwhelming and your credit isn't good enough to get a balance transfer card or a low-interest personal loan, it may be worthwhile to seek the services of a reputable credit counseling agency.
Credit repair does not give you a way to remove negative information that is accurate and verifiable. Again, it's important to note that a credit repair service can't do anything you can't do on your own. The Better Business Bureau does not qualify any company whose primary service offering is credit repair. Historically, mail has been the preferred method for credit repair companies for several reasons.
As long as you review those three reports regularly and make sure they are error-free, you can usually present the best possible credit profile when someone checks your credit. Nearly all lenders and creditors go to the three major credit bureaus (Experian, Equifax or TransUnion) to purchase consumer credit reports. Not only can closing scores hurt by eliminating that available credit and increasing your credit utilization ratio, but keeping paid accounts open can also be an advantage because they are old accounts that are in good standing (paid). The intention is for credit bureaus or providers to delete credit information altogether or modify it in a way that is more favorable to the consumer.
Opening multiple credit accounts in a short period of time can make it seem risky for lenders and, in turn, adversely affect their credit ratings. If you have had credit difficulties in the past, how long it will take to recover depends in part on the seriousness of the negative information on your credit report and how long ago it occurred. .
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