You've been following all the rules when it comes to your finances.
You're paying your bills off every month. You maintain reasonable credit balances. You even went out of your way to take out an auto loan on your new car.
But you're still not happy with your credit score.
Maybe you had bad financial habits in the past or you got hit with a difficult life situation a few years back. Maybe you're doing everything right but you simply have a tendency to overlook certain bills until you're getting phone calls about them.
If any of this sounds familiar, working with a credit repair company might sound like an appealing solution. But is it an option that you should be considering?
Here are three questions that you may want to ask yourself before you try to hire a credit repair company.
Question 1: Do You Have a History of Late Payments, Bankruptcies, or Other Credit-Related Struggles?
When most people hear the phrase "credit report error", they immediately start thinking of account mixups or, more sinisterly, cases of identity theft.
But the truth is that errors on your credit report can include:
Accounts you paid off on time that were mistakenly reported as late
Inaccurate account balances
Negative information that should have dropped off of your credit report
Debts that haven't actually been verified
The Consumer Financial Protection Bureau noted in 2019 that up to 20% of Americans had some form of error on at least one of their credit reports. Credit repair companies are often very good at finding, disputing, and disagreeing with credit report errors.
But this efficiency has a limitation that can be boiled down to one question:
Is the negative information on your credit report accurate?
Because if your credit score is being hampered by an accurate history of late payments or high credit card debts, a credit repair company may not be able to do a whole lot to help you.
Question 2: Is This Company Reputable?
Credit repair scams are such a common occurrence that the FTC has an entire webpage dedicated to helping consumers identify signs that they may be dealing with fraudsters.
And this is for good reason.
Hiring the wrong company could end with you spending money without any results at best and unwittingly purchasing stolen identities at worst.
Some signs of a credit repair scam can include:
Claims of being able to fix any credit situation
The offer of a new credit identity
Additional demands for upfront payment
If a credit repair company has sprung up out of nowhere and is making bold claims that sound too good to be true, slowing down and making extensive use of Google could save you a lot of grief in the long run.
Question 3: Would You Be Better Off Fixing Your Credit Yourself?
From finding and disputing errors on your credit report to spotting the weaknesses in your credit profile that could be sinking your credit score, many of the services offered by credit repair companies are tasks that you can easily do for yourself.
If you're the type of person who struggles to remember things or who just doesn't have the bandwidth to wade through your credit situation after a grueling day at work, a credit repair company might make sense.
But at the same time, credit repair companies can be expensive.
At the end of the day, there are no right or wrong answers with this one. All you can do is decide what's best for you.
Credit Repair vs Credit Monitoring
Interested in the perks of credit repair, not interested in doing it all yourself, and also not sure if the figurative or literal price tag is worth it?
Credit monitoring could be the solution that you're looking for.
With credit monitoring, you can get many of the services that you would be getting from a credit repair company such as the ability to track your score, view your credit balances, and get general advice on how you can improve your credit score. But often at little to no cost.
Conclusion
Personal credit is serious business. After all, it's a three-number score that can affect everything from your ability to land that dream apartment to your job prospects if you have major corporate ambitions.
With so much at stake, however, it's only natural to be interested in hiring a credit repair company. But before you do, it's a good idea to think very seriously about whether or not a credit repair company is a viable option for your situation.
To that end, the three questions we've just given you can go a long way towards helping you determine what's in your best financial interests.
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