Does Credit Repair Really Work? Beware of These 5 Promises

Did you know simple errors on your credit report could cost you the benefits of a high credit score? According to federal laws regulating credit reporting and debt collection, you have the right to a credit report free from inaccurate information, outdated records and repeat records of the same debt. Businesses of all sizes use business credit repair services to remove these inaccurate entries and boost their scores. But before taking on a credit repair company, it’s important to know the facts.

Are Credit Repair Companies Worth It?

Your credit score has a huge impact on both personal and business costs. If you’re among the 5% of consumers with errors on their credit reports, you could be affected by records of:

• Debt from accounts that aren’t yours
• Bankruptcy for which you didn’t file
• Misspellings causing other people’s records to appear under your name
• Debt that should have been aged off the report

Business credit repair services check your credit reports from all three reporting bureaus. In doing so, they can identify inaccuracies, then either dispute or negotiate the records to have them removed. The process typically takes a few months to a year and can raise your overall credit score. These companies should also provide credit management advice to help optimize your score in the future. A higher credit score can make it easier to qualify for business financing at low rates. You may be able to access more funding or higher credit limits. Your business insurance premiums may go down. Overall, you’ll have better access to the opportunities you need to grow your business.

Finding Reputable Credit Repair Help

There is one major problem with credit repair services: Not all companies are reputable. The Credit Repair Organizations Act (CROA) exists to protect individuals and businesses against unscrupulous practices. Nonetheless, doing your due diligence before signing up can save you the headache of having to take legal action against a scammer. Here are five things to beware of when seeking credit repair help.

Detailed Information of Your Rights Isn’t Provided

All credit reporting companies are required to present you with a Consumer Credit File Rights Under State and Federal Law statement. This asserts you have the right to contact credit bureaus and dispute errors on your report independently, and for free, if you so choose. The document also declares your right to file a statement of why you think a record is inaccurate, even if the credit bureau disagrees with your assessment. This goes with your credit report whenever an organization or institution reviews it. Credit repair services that don’t give you this information, or tell you not to contact the bureaus, may be running scams.

The Company Promises to Remove All Negative Information

According to CROA, credit repair companies are prohibited from altering or making changes to any information in your credit history with the intent of hiding legitimate negative records. Accurate reports of events like late payments and civil judgments must remain on your report for seven years; bankruptcy records remain for 10 years. Credit repair can only dispute records erroneously left on your report longer than required.

The Contract is Vague or Nonexistent

Prior to performing any services, a credit repair company must provide you with a contract. The document should include:

• The full name and physical address of the company
• How much you’ll be charged for services
• The date by which the process will be complete
• Your right to cancel services within three days of signup without being charged
• Full details of expected results

Beware of any company making concrete guarantees. This includes raising your credit score by a specific number of points or repairing it within 30 days, especially if no one has reviewed your reports yet.

Advanced Payment is Required

Charging fees before any credit repair work has been done is against the law. Anyone who attempts to do so is probably looking to take your money and run. Some companies may charge signup or setup fees; this is also illegal. It is, however, acceptable for companies to ask for a “first work” fee after doing some initial work, such as obtaining and reviewing credit card statements and preparing the first round of dispute letters. Apart from this, it’s typical to be charged per negative record removed or through monthly payments covering the previous months’ credit repair work.

You’re Told to Create a “New Identity”

If a credit repair service advises you to use a “new” Social Security number they provide, run in the other direction. Following this advice could get you in serious trouble for either stealing someone else’s identity or misrepresenting your own. These numbers may be actual stolen Social Security numbers sold under the guise of “credit profile numbers.” Using one to apply for all future credit and financing does nothing to fix your credit; you’re just attempting to illegally circumvent the problem.

Fix Your Credit – And Avoid Bogus Credit Repair Schemes

If you believe errors in your credit report may be affecting your score and hurting your business, credit repair services can take the burden off by handling disputes for you and cleaning up your credit report while you focus on running your business. Because it can take up to 30 days for a credit bureau to investigate and verify records, you want a legitimate credit repair company that will stick with the process until your credit report is fixed.