Rebuilding Your Financial Reputation With Credit Repair

Rebuilding your credit can take time, but taking the right steps can help you achieve your financial goals. It's also important to avoid actions that can hurt your credit, such as late payments or high levels of debt. Credit repair companies may be able to find errors on your credit report that are impacting your score. But you can also do this on your own.

Establish a positive credit history

If your credit report contains errors, inaccuracies or negative information like bankruptcies, late payments and collections, it can limit your options to buy a home, start a business or finance education. Credit repair companies offer services to help consumers improve their creditworthiness, boost their credit scores and qualify for better financial products and rates. Ensure the credit repair company you choose is reputable and follows federal consumer protection laws. Look for red flags, such as demand for payments upfront or results that sound too good to be true. Check the CFPB’s complaint database for more tips. It is possible to improve your credit score without a credit repair agency, such as disputing mistakes with the credit bureaus or negotiating debts with creditors. You should also continue to pay bills and other financial obligations on time, and try to reduce the number of hard inquiries on your credit report. It’s important to understand that repairing your credit isn’t an overnight process.

Monitor your credit report regularly

Credit repair companies can help consumers dispute inaccurate information in their credit reports. However, it's important to understand that these firms can't legally do anything for you that you couldn't do yourself for free. This includes reviewing your credit reports for mistakes and reaching out to the credit bureaus to have them investigate. A reputable credit repair company should be honest and transparent with its customers about what it can and cannot do. If a company makes claims that sound too good to be true, it's probably a scam. For example, if inaccurately reported negative information has already fallen off of your report, there is nothing a credit repair service can do to remove it earlier. In addition, frequent disputes without solid evidence can lower your score even further. This is because lenders may view your credit disputes as a sign of weakness and a lack of responsibility, Owens says. In most cases, accurate negative information will stay on your credit report for seven to 10 years.

Avoid new credit issues

If you discover an error in your credit report, work on a plan to correct it. Depending on the nature of the error, your plan may include contacting the credit bureau to dispute the information or asking for a copy of your report so you can check for errors yourself. Be wary of credit repair companies that claim they can remove accurate negative information from your report. The Fair Credit Reporting Act states that credit agencies must investigate disputed information and can't just remove the debt from your report. A good credit repair company should be able to help you establish a solid budget, improve your spending habits and build your financial reputation with lenders. It should also offer a satisfaction guarantee and be transparent about its fees and services. Check online reviews and CFPB complaint databases to gauge a credit repair company's compliance record. Also, be cautious of credit repair services that charge upfront fees or promise results that sound too good to be true.

Be patient

There are no shortcuts when it comes to credit repair, and you should expect to see a slow, steady climb as you work to improve your score. However, by identifying and disputing errors on your report and focusing on improving your financial habits, you can start to see real improvements in your credit score over time. If you find yourself struggling with high credit utilization, consider seeking help from a financial advisor or credit counseling agency to guide you on strategies and tactics for reducing debt and paying bills on time. Just make sure to choose a reputable service and check out the company's reviews before you sign up, since many people tend to post complaints when they are unhappy with a credit repair company. Also, keep in mind that a credit dispute can take up to 45 days to be resolved. If you aren't seeing any progress, consider calling the credit bureaus to follow up on your claim.