Companies That Help Clean Up Credit

No magic formula exists to repair the effect of a bad payment history on your credit report. But there are companies that can help you understand the laws regulating credit reporting and how to use those laws to your advantage when dealing with negative entries on your credit report. As with any field, some companies are legitimate and others are not. It is up to you to decide if an organization can help you improve your credit score or if you are better off on your own.

The Facts

There is nothing that a credit repair company can do for you that you cannot do for yourself. No company possesses "inside knowledge" or secret tactics that work better than anything you can do on your own. In some cases, credit repair companies can hurt your score rather than improving it.

Methods

The most common method employed by credit repair organizations is to dispute your debts with credit bureaus. If you have more than a few negative entries on your credit history, most companies will dispute them all at once. Not only does this make any disputes from you appear suspicious to the credit bureaus, but your disputes are less likely to merit a thorough investigation. A much better method is to dispute each debt individually because the credit bureau is more likely investigate that issue thoroughly. Ask the credit repair company to outline their approach in writing so you can review it and make your decision accordingly.

Advantages

Credit repair can be a complicated process, and to be successful at removing negative entries an individual must be fully versed in all aspects of law as it relates to credit reporting and disputes. The work involved is often too much for an individual to do himself. In cases like these, a credit repair organization may be worth the expense.

Disadvantages

If your credit report dispute is done inaccurately it can have negative long-term effects, allowing credit bureaus to consider any future complaint frivolous and meaning that you won't be able to erase a negative incident from your history for seven years (see Resource 1). Many credit repair companies do not offer any training to their representatives, meaning the person trying to fix the situation could know less about the process than you. In addition, many credit repair companies are scams, so be sure to investigate the company you choose.

Misconceptions

While some financial planning websites will tell you that you cannot remove accurate negative information from your credit report, this simply is not the case. Once a dispute is filed, the legal burden of proof lies with the creditor reporting the debt. With the large volume of consumer accounts in collections, some creditors are unable or unwilling to validate your information. If this occurs, the debt must be removed whether it is legitimate or not.