Before you sign any type of credit repair agreement, it’s crucial to ask some basic questions. While the Credit Repair Organizations Act regulates credit repair companies and protects consumers, there are scammers. To protect yourself, here are ten questions to ask your credit repair company:
- 1 1) What Can You Do to Help Restore My Credit?
- 2 2) What Qualifications Do You Have?
- 3 3) Do You Offer Fixed Price Programs?
- 4 4) What Information Do You Need From Me?
- 5 5) How Do You Fight Bureaus for Me?
- 6 6) What Information Can I Dispute?
- 7 7) How Long Will it Take to See an Improvement on My Credit Score?
- 8 8) Do You Work with Attorneys?
- 9 9) How Can I Be Part of the Process?
- 10 10) Do You Offer a Money-Back Guarantee?
- 11 Other Important Information
- 12 The Bottom Line
1) What Can You Do to Help Restore My Credit?
Credit repair companies usually offer a wide range of services designed to help you restore your credit. Common issues include:
- Mortgage derogatories
- Mortgage collection
- Charge offs
- Tax liens
- And more
When you work with a credit repair company, you should know what services the company offers and what kind of issues they can help you solve.
2) What Qualifications Do You Have?
To build trust with your credit repair company, you should be aware of the qualifications they have. See if the company has established credibility in the community. Have they helped past clients achieve success?
A credit repair company should have good relationships with other service providers, such as mortgage brokers, loan officers, and financial affiliates.
It should be clear whether your credit repair company has helped other clients meet their goals. Use reviews, testimonials, and certifications to make an informed decision.
3) Do You Offer Fixed Price Programs?
Before signing up for a service, you want to be sure that it won’t drain your finances. You need to have a thorough understanding of credit repair costs.
Many service companies create some sort of incentive that encourages you to subscribe to a monthly service, which helps them make more money off of you.
Credit repair companies, like Sky Blue Credit, should have a fixed price program and use incentives sparingly. Their goal should be to help you to fix your report, not get sucked into debt.
4) What Information Do You Need From Me?
Credit repair companies should give you clear instructions about what personal items and information you must gather to get started.
Here are some items you may need to collect:
- Credit reports from all three credit agencies (Equifax, TransUnion, and Experian)
- Credit history
- List of debts
- Credit utilization rate
- Payment history
- Credit plans (buying a car, applying for a mortgage, etc.)
- Access to a credit monitoring software
When you begin the sign-up process, your credit repair company will likely ask if you have those items available immediately. If not, they will ask how long it will take you to collect them.
From there, you will probably have to schedule an intake session and provide all the information you do have presently. The company should follow up within the next couple of days.
A good credit repair company works efficiently. With matters related to credit, waiting to clear up errors or improve your score can come at a high cost.
5) How Do You Fight Bureaus for Me?
One responsibility of a credit repair company is to keep track of any faulty claims on your credit report. These erroneous claims can impact your credit score and start to affect your finances.
When asked this question, your credit repair company should explain the process by which they draft dispute letters and negotiate with creditors.
The answer to this question should give you a better idea of how the company’s process gives you an advantage.
While the company should be able to offer you certain benefits, it cannot say that their system is 100% guaranteed to work.
At the same time, there are several strategies credit repair companies use to work with creditors. See how they perform in different areas, such as:
- Do they effectively remove any incorrect information from your report?
- Do they negotiate on fees, adverse credit, and interest?
- Do they help reduce the impact of late payments and other negative reports?
Some credit repair companies can even reduce the total amount you owe to a creditor by 50%. Whatever the company’s process is, you must understand how they do business.
6) What Information Can I Dispute?
By law, credit bureaus must report accurate information, even if it damages your score. Just as they are legally obligated to report this information, they are obligated to remove it if it’s false.
However, getting rid of negative information is harder if it’s true.
Your credit repair company can help you dispute inaccurate claims and get them erased from your report. When it comes to removing accurate claims, it’s much trickier.
There are specific ways to remove this information like pay for delete, debt validation, and goodwill deletion requests. However, these can be costly and don’t guarantee an improvement in your rating.
7) How Long Will it Take to See an Improvement on My Credit Score?
This question allows you to gauge how long it will take you to meet your goals.
However, repair companies should never guarantee an improvement. You should expect a money-back guarantee, but a guarantee that your score will improve is an empty promise.
Most companies do keep a record of improvement rates from past clients. This data is essential because it can help you decide whether you want to work with that company.
8) Do You Work with Attorneys?
When it comes to credit restoration, sometimes your credit repair company will need to bring in an attorney. Ask your credit restoration company if they have experience working with attorneys in litigation cases.
Most credit restoration companies avoid working with attorneys unless it’s necessary. If you’ve chosen a reputable company to work with, you should be able to meet your goals without having to take legal action.
9) How Can I Be Part of the Process?
As the client, you also have a responsibility to be responsive and engaged when trying to repair your credit. The company that you work with should understand this and involve you in many ways.
Reputable credit restoration companies share strategies for improving credit scores with their clients. They may suggest things like paying off current balances and not applying for new accounts.
You should also be ready to provide supporting documentation at a moment’s notice. In order to write valid dispute letters, credit restoration companies must be able to provide documentation that supports their claim.
You must also forward any correspondence sent to you that your credit repair company might need. If you are in the middle of any ongoing disputes, you should transmit any materials that you receive from credit bureaus and creditors.
10) Do You Offer a Money-Back Guarantee?
When a company offers its customers a refund, it means that they have a commitment to creating a positive experience, and they are confident in their products and services.
Don’t be afraid to ask your credit repair company if they offer a money-back guarantee.
Other Important Information
Now that we’ve shared some questions you may want to ask your credit repair company, let’s talk about some other things you may want to know.
Credit Repair Involves Your Credit Report, Not Score
When it comes to repairing credit, many people watch for their score to rise. However, these companies work on removing false claims from your report, not raising your score.
There is a connection between your credit report and score, to be sure. Credit repair involves the information listed on your credit report, and this information influences your credit score.
If you want to begin improving your credit, the first thing you should do is check your report and find out what is hurting your credit. Once a year, you can get a free copy of your report from each major bureau.
Sometimes Doing Nothing Is the Best Bet
Information that negatively impacts your report won’t stay on it forever. Most negative information only stays on your report for seven years.
For example, unpaid tax liens and chapter 7 bankruptcy remain on your report for up to 10 years.
If an account on your report is nearing the end of that time frame, waiting for it to expire may be a better option than trying to remove it.
Closing an Account Won’t Erase It From Your Report
Many people believe that only open accounts are in their report. Unfortunately, this isn’t the case. Closing an account in the effort to remove it from your report won’t work.
Any information about the account that you close will remain on your report. Before you decide to close an account, think about the other factors that impact your score, like the length of time that the account has been active.
If the amount is in good standing, or you think that you can bring it back to good standing, consider leaving it open. The account may help you repair your score.
Credit Repair Requires Changing Your Habits
If you decide to go through with the credit repair process, you have to use the opportunity to form new habits. Unless you change the habits that got you into a bad situation in the first place, you won’t be able to maintain good credit.
Only borrow money that you know you can pay back, and always pay your bills on time. Lenders and creditors want to see that you can handle finances responsibly and make payments on time.
Also, avoid falling into debt and saving if you can. Even small savings can off-set the need for going into additional debt and impacting your score.
The Bottom Line
Practice good credit-building habits all the time, and you’ll be much better for it. We hope you found this article informative, and we encourage you to check out some of our other in-depth articles about credit restoration and working with credit repair companies.
Matt is the founder of CreditInformative.com and holds a Bachelor of Commerce (BCom) with a major in Finance and Marketing and a Bachelor of Arts (BA) with a major in Economics and History. Matt’s advice has been featured on Business Insider, Fox Business, Newsday, Money Under 30 and many other publications.