Credit repair service is a valuable service to all of them who have credits. There are several credit repair companies ready to offer services to the credit holders with attractive promises. But the fact is not all credit repair companies operate ethically. Some may make fake promises only to grab customers and charge high payments. Understanding the benefits and drawbacks of these services can help you make a wise decision on whether to use them or not.
Pros of Using Credit Repair Services
1. Expertise in Credit Laws and Disputes
Credit repair companies are knowledgeable in processing consumer protection laws, such as the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). They are capable of finding errors on credit reports and dispute them effectively with credit bureaus.
2. Time Saver and Stress Reliever
Disputing inaccuracies or errors on a credit report is a very time-consuming matter. Credit repair services contact the credit bureaus and creditors directly on the behalf of the clients and handle all of the inquiries according to their policies. As a result, clients do not need to spend their extra time on it and they don’t have to bear the hassles.
3. Plan Properly to Improve Credit Scores
A person’s credit score may increase if the inaccuracies or errors can be removed or decreased from the credit history. Here, the agencies set up a proper plan to find out the best ways to improve one’s credit scores.
4. Provides Personalized Credit Advice
Many credit repair services offer personalized financial advice, helping clients understand factors affecting their credit scores. They suggest how to maintain good credit habits to have a long term error free credit report in future.
5. Helps with Debt Negotiation
Credit repair companies negotiate with the creditors about the loans or debts on behalf of clients to provide them with the best beneficial plan to reduce their debts.
Cons of Using Credit Repair Services
1. High Costs
Credit repair service charge vary from company to company. Many companies often charge monthly fees or a one-time setup fee ranges between $50 to $150 per month.
2. No Guaranteed Results
Several companies make fake promises to the consumers in terms of improving their credit scores. But the reality is no credit repair company can guarantee a specific improvement in a credit score. Many consumers get trapped by these companies and result in losing big amounts. That’s why The Consumer Financial Protection Bureau (CFPB) warns consumers about companies making unrealistic promises.
3. Potential Scams and Fraud
Some credit repair companies engage in fraudulent practices, such as charging upfront fees (which is illegal under the Credit Repair Organizations Act).
4. Temporary Fixes Instead of Long-Term Solutions
Credit repair services may help you in removing negative marks from your credit report but they will not teach you financial responsibility. Without good credit habits, credit issues may resurface in the future.
Conclusion
Credit repair services offer convenience and expertise, but they come with costs and risks. Before choosing a service, you need to check the pros and cons carefully. In many cases, individuals can repair their credit by themselves including disputing errors, making timely payments, and using credit responsibly. So, if you decide to hire a credit repair company, ensure it is reputable and complies with consumer protection laws.