How Do Credit Repair Companies Work to Fix Errors on Your Credit Report?

Living debt-free is an amazing experience but is, unfortunately, a preserve of a few. For the rest, it is almost inevitable to avoid taking loans and credit to cover daily expenses as you wait to receive your paycheck.

These loans could either be long or short term, depending on what you want to do with the money. Since you will be taking these loans for quite some time, you must have a healthy credit report. Banks, money lenders, car dealers, potential employers, and other entities you deal with in your daily activities check at your credit report to determine your financial responsibility and trustworthiness.

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If your report indicates a poor credit rating, you will face difficulties acquiring credit, getting employment, or dealing with any financial institution. You can always hire a credit repair company when your credit report has errors that affect your rating or when unable to service your debt in time. Here are a few ways that these companies can assist you in resolving such mistakes in your credit report.

1. Complete and Thorough Evaluation

There are three credit bureaus in the country. These include Experian, TransUnion, and Equifax. When you use the services of credit repair companies, they extract data from all three. They then evaluate in detail data from these reports to identify any errors, mistakes, or discrepancies.

If they identify any errors or credit blemishes, they initiate the process of removing them from your report. These blemishes or errors could include mistakes with your payment history, negative items that have expired, and duplicate accounts, among other negative items.

2. Removing Questionable Credit Items

Once you present your credit report to a credit repair company, it thoroughly reviews the report to ensure that every entry is correct. If any derogatory marks, including bankruptcies, charge-offs, and tax aliens, they help you remove them from your report. The said company initiates a process of disputing these errors by contacting your creditors on your behalf and negotiating to have the items removed.

Derogatory marks affect your credit rating negatively and may remain on your report for seven to ten years. These marks must be removed for your financial well-being.

3. Remove Outdated Information

The credit repair companies’ specialists go through your report and identify outdated information. Negative accounts on your report should only remain for a defined period. If such information extends for more time than it is supposed to, it can adversely affect your credit rating.

There are numerous cases where credit bureaus, the institutions with the mandate to maintain your credit reports may miss such information. As an individual, you may not identify such mistakes easily, so the credit repair companies do it for you and have the bureaus remove the negative information.

4. Identify Missed Payments

There are those times when you have to pay slowly and in small amounts to clear a debt. Accountants may, in some cases, miss out on such payments and fail to have them appear on your report. You may not have the time to thoroughly go through these entries and thus remain on your report affecting your rating.

A credit repair will identify the missed payments and contact the creditor in question to have them include them on your report hence improving your rating.

5. Help you get from Illegal Collections

Credit repair companies help you dispute debts that lenders might be collecting illegally. You may not be aware, but some companies place illegal interests on their loans to trap you in debt. When you initiate a dispute, the bureau goes to the creditor to verify such information.

If the collection is illegal, it is stopped and the information removed from your credit score. It helps enhance your credit report and helps put you in a better place to get credit from other lenders easily.

6. Liaising with Financial Institutions

You may choose to go through your credit report to identify errors and mistakes instead of paying credit repair companies. However, this work would take you a lot of time that most people do not have. Secondly, since you lack the experience to identify some errors, you may not identify mistakes affecting your rating.

Lastly, you may not be very successful in having creditors or bureaus having those mistakes removed. Credit repair companies act as a go-through or a link between you and these institutions. They will ensure that any information that should not be on your report is removed since they already have a history with the financial institutions.

Interesting related article: “What is Creditworthiness?”