What do credit repair companies do?
While credit repair companies don’t have the legal power to do anything you can’t do yourself, they do play an important role for people who feel overwhelmed trying to fix their credit themselves. There are legitimate reasons consumers may turn to a credit repair company, including getting fraudulent accounts removed from their credit report amending mismerged credit accounts that belong to someone else, and accounts in bankruptcy that are misreported.
Legitimate credit repair providers assist consumers by reviewing the consumer’s credit reports, identifying information which is adverse to the consumer, interviewing the consumer, and obtaining documents from the consumer to determine whether any of the derogatory information is false.
From there, they typically prepare a letter to the credit bureaus disputing the errors. The dispute letter should identify the errors with specificity, briefly explain why the disputed information is false or misleading, and state what the credit report should say instead.
While a dispute letter is almost always used as a measure to move toward better credit for the consumer, additional strategies credit repair companies take to fix their client’s credit can vary depending on their unique situation and their credit woes.
Some of the steps credit repair companies can take on your behalf include:
They may help you get a copy of your credit report from the three credit reporting agencies – Experian, Equifax, and TransUnion. They will go over your credit report to determine what problems exist and the best course of action to fix them.
They may help you utilize federal consumer protection laws to protect you and your credit from unfair debt collection practices.
They may analyze your credit score and offer targeted information that can help you improve your credit score as you progress through their program.
They may negotiate with your creditors on your behalf.
They may dispute any information you feel is inaccurate on your credit report with the goal of having negative information removed altogether.
Credit repair agencies may also help consumers fix incorrect credit limits that can inflate or skew credit utilization and adversely impact a consumer’s credit score.