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Credit repair is a service that helps fix inaccurate items on a credit report. It can be as simple as finding mistakes with credit agencies or as complex as dealing with identity theft. Some cases of credit repair may need more than financial consulting, but also legal help. Luckily, it is a fairly easy process to follow. You sign up with a credit repair company, they pull your credit report and discuss with you what items you deem incorrect. They can also help you identify items you want to challenge or change, and essentially tailor a program best suited to your personal financial abilities. The credit repair company then contacts the credit companies and credit bureaus directly to communicate the necessary changes.
Along with removing the erroneous items on your credit file, credit repair companies can help you set realistic, reachable credit goals. They can also provide you with practical and honest credit advice which help improve your score.
Credit repair companies can help take off incorrect account information and outdated account balances.
The major benefit of credit repair services is that it can improve your financial health. Having a strong credit report will assert your financial responsibility and help lenders assess your risk. Once the mistakes have been rectified, you can start seeing the benefits of credit repair in 30 days (but it can take about 6-8 months or more to see an improvement). The time it takes to see improvement depends on each specific case. If you only have a few valid disputes, for example, then it can be easily rectified. Some cases, like identity theft, might take longer. The best way to ascertain the time would be to go over your personal credit report with a counselor. You can also repair credit yourself, but going to a company that has knowledge and contacts might be a more effective way to repair your credit.
There is a cost associated with the service, but it is well worth it in the end because it will help you improve your credit score. If the negative information on your report is accurate, it will take a few years to go away. A credit reporting company can retain negative information on your report for up to seven years and a bankruptcy for 10 years.
A poor credit score can cost you several thousands of dollars; if you have a mortgage or credit card you probably already know this. If you are trying to get another line of credit, such as a personal loan or a credit card, you also should know that you will be slapped with higher interest rates, unnecessary fees, and likely not get the offer you deserve. If you are trying to get a credit card with a bad credit history, you will be eligible for sub-prime cards that tend to have an initial security deposit, high fees, recurring monthly payments, and a limited credit line. The most devastating effect of a bad credit report and score can be seen in a mortgage payment. A home can cost about $50,000 more in interest rates alone because of average credit. Look at an example comparing interest rates for a good credit status vs. a poor or damaged one.
At LendingTree, we want to help you monitor and improve your credit. Each month, we’ll give you your credit score for free in addition to evaluating your credit score and current debt to see if there is any room for savings. If we find savings, we’ll send you an alert via email.
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