Legitimate credit repair companies can help you correct errors in your credit report, recover from identity theft, and get you back on the road to healthy credit. They do so by examining your credit report and challenging errors on it. It is something most people can do, but it can be both time consuming and frustrating, which is why many people turn to reputable credit repair companies to help fix their credit.
While legitimate credit repair companies are great, many times people with bad credit can get a little desperate, which provides opportunities for unscrupulous companies to try to take advantage. If a credit repair company tells you that it can remove accurate information from your credit report, create a new identity, asks for upfront payments, or makes any guarantees to improve your credit, they are not only probably too good to be true, but may be engaging in illegal behavior.
Real credit repair companies look for negative items on your credit report. If any of these are errors, they dispute them. Once information is disputed, the credit companies have to verify the basis of the negative report. If they cannot be verified or if the credit repair company can disprove them (such as in cases of fraud), then the reporting agency will remove them from your credit report. Some credit repair companies may also negotiate with creditors to help reestablish payments to resolve any delinquencies or to stop collections proceedings.
While many non-profits offer free credit counseling that can be helpful to some folks experiencing credit problems, they tend to focus more on the underlying reasons that someone may have bad credit and less on bad credit that is the results of mistake or fraud. Therefore, while some people suggest credit counseling instead of credit repair, which one is more appropriate depends a little on the type of credit problems that exist.
The downside of credit repair is that it is not free; credit repair companies are for-profit businesses and they are going to charge for their services. Fees vary depending on the company and the level of service that you are seeking. You may pay a flat fee or a monthly fee. One thing to keep in mind is how many issues there are on your credit report; most companies limit the number of disputes they will file per month or will charge for additional disputes.