PERSONAL FINANCE: The Credit Repair Companies – What You Should Know
By Space Coast Daily // December 24, 2017
Do Credit Repair Companies Work?
Folks who want to remove all the negative items, such as late payments, liens,etc., from their credit reports need the assistance of credit repair/restoration companies to improve their FICO or credit score. They can also do it themselves.
But, this is not an easy task. It’s like with a car. You might be able to fix it, but it’s a whole lot more intelligence usually to go to a professional mechanic who does that for a living.
The main drawback of having bad credit is that it starts to multiply your interest rates, loan rejections, etc. So, if you want to buy a home, a vehicle, take a loan to start a new business,etc., then you have to fix your credit report.
The credit repair services are provided by many companies but to choose the best and the reliable one is an overwhelming task. Do you need to understand how they work? How much could the total repair cost be? How much is a particular company charging you?
For your guidance, the most credible credit repairs companies of 2017 are Lexington Law, Sky Blue Credit, CreditRepair.com, Pyramid Credit Repair, Credit Assistance Network and The Credit People.
Do Credit Repair Companies Work and How Exactly?
The short answer is yes. They will work, and they will fix the damages on your credit report. This is the information that is dragging down the credit scores of the customers. So, you have to understand that how credit scores are exactly calculated?
FICO is a company that calculates 90 percent of all the credit scores, and they take into account five important factors during calculation. These are:
- The first and foremost is your credit history. This is roughly 35% of your overall credit score.
- The other big swinger is your amounts owed, and that’s another 30%.
- The types of credits you have.
- How long you are using credit
- How often are you applying for new credit?
You don’t need to worry about the last three items as they are not so much in your control. But your credit history and the amounts owed are the big swingers.
The credit repair companies will do all this on your behalf. The legitimate ones will work in this way. But, the truth is the credit bureaus spend money when they invest in consumer disputes. This money is, otherwise, profit. So, while Congress passes alaw, they require the credit bureaus to investigate the consumer disputes.
They only investigate valid disputes. Thus, the vast majority of consumer disputes, not all of them, are first deemed invalid. So, the credit bureaus don’t have to spend that money. Otherwise, it’s profit.
There is a clear conflict of interest here, and the credit bureaus have been fined multiple times by the Federal Trade Commission (FTC) for not following this law, for not following rules, for not following regulations and for not accepting and handling consumer disputes appropriately. However, the credit bureaus are big businesses, and they earn billions of dollars of revenue every single year.
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