Credit repair agencies (the good and the bad)

If you are in the difficult position of having a less than desirable credit score, some of the commercials and ads for credit repair agencies may have piqued your interest. You may think a credit repair agency is the only option, especially if you have gone through a bankruptcy or feel that your spending habits are out of control and you do not know how to get a handle on them. If that is the case, you may feel going to a third party for help may be the best option. But is it always the right choice? It really depends on where you go for help.

 Who Needs a Credit Repair Agency and Why?

 The first thing to be aware of is that even if you have bad credit, you do not need a credit repair agency to begin the process of improving your score. It is something you can do all on your own as long as you have the right information. This is because the Fair Credit Reporting Act ensures that citizens have the right to know their credit score and be able to see what kind of information is being used to arrive at the score. For example, you may find that there is inaccurate information contained in your credit report, which you are then allowed to have corrected by notifying the appropriate reporting agency.

 This process may seem difficult and confusing to someone who does not regularly deal with these types of transactions, so some people may feel more comfortable asking a third party to assist them. In that case a reputable credit repair agency can go a long way to help you through the sometimes burdensome process of gathering information and sending out letters to credit reporting agencies to ensure the most accurate information is being reported about your credit history.

 Are there Differences in Credit Repair Agencies?

 It is also important to note that there are different types of credit repair agencies. The ones you should be wary of are any agencies who claim they are able to repair your credit completely and quickly. This is not so, unless you have some major discrepancies reported on your credit report. Most people who have badly damaged credit will have to follow a slow and steady protocol of paying bills on time and living below their means in order to pay off excess debt. So any agency who claims they can erase history such as bankruptcies or delinquencies in every case are just plain lying!

 There are, however, credit repair agencies who serve more as credit counselors and can help you through the process of correcting mistakes, and perhaps providing some additional guidance about ways you can improve your financial situation through a common-sense approach, such as reducing the use of credit cards, creating a budget and sticking to it, and paying bills on time. This type of counseling can be very valuable to people who feel they simply cannot begin to improve their financial situation alone. Just remember, this type of service is sometimes offered for free through government or other community organizations, and hefty fees for this type of service should be avoided.

 Repairing Credit Takes Time

 Just be sure to keep in mind that mending bad credit will take some time. There are certain types of debts that can stay on your report for years, even after they have been paid off. Repossession of property you owe money on can be listed for seven years, and bankruptcies can remain for up to 10 years. But even if you have these types of dark spots in your credit history, beginning to pay bills on time and in full on a regular basis can go a long way towards improving your credit score for the long run.

Tuesday, January 26th, 2010 Credit

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