Legal credit repair services are nothing different from the status quo. It was actually a term invented by the industry to address an image problem created by a few unscrupulous providers. However, does the use of the word 'legal' make it any easier for a would-be customer to tell the difference between the good and the downright awful? It also doesn't disguise the fact that do-it-yourself credit repair is an equally viable, not to mention cheaper, alternative to using the services of a professional company.
Rapid Bad Credit Credit Repair is Not Possible
Contrary to the claims of certain providers, it is not possible to improve bad credit overnight. Although there are steps that can be taken to remove credit report errors or to distribute credit more effectively, it can take months or even years to rebuild credit ratings to what they once were. What's more, never believe any company that claims to be able to get the customer a completely new credit report. The attainment of credit under false pretenses may seem like the answer, but it is fraud and punishable by imprisonment.
Do-It-Yourself Credit Repair vs Legal Credit Repair Services
It's always easier to let someone else do all of the work, but no company that can fix poor credit ratings does so for free. The reality is that many professional credit repair companies don't just charge a setup fee, but require a monthly payment of up to $100 as well. At some point the customer has to work to cover this additional monthly outgoing and the chances are that he/she will have to work a lot harder. Fixing bad credit takes time and can be a minor inconvenience, but there is nothing that credit repair companies do that cannot be performed by the individual.
Improving Credit Scores Through Credit Redistribution
Credit reference agencies look closely at the amount of a credit facility that has been used up each month. Maxing-out a credit card, even if settled at the end of the month, will lead to a fall of about 15 to 30 points. A legal credit repair company will advise its clients to use no more than 10% to 30% of their credit limit in a single month. Even if it saves money, it is also advisable to avoid performing a credit card balance transfer from a high to a lower limit card. Use personal savings to pay down debt.
Closing down old credit and store card accounts may seem like a logical do-it-yourself credit repair step, but it is actually counter-productive. Far from fixing credit history reports, it is interpreted by credit reference agencies as a higher level of credit utilization. Liz Pulliam-Weston of MSN Money said that the customer should: "Use their oldest cards every few months to charge a small amount, paying it off in full when the statement arrives." Rather than opting to cancel credit cards, it is better to just use them occasionally instead.
Improving Credit Scores By Correct Credit Report Errors
A surprising number of credit reports contain information that isn't correct. The Fair Credit Reporting Act gives the consumer the right to correct any inaccurate data that has resulted in an adverse credit rating. A report should be requested from each of the major credit reference agencies - Experian, Equifax and TransUnion - as each agency holds completely different information.
There may be reports that are under the wrong name or social security number. In some cases debts have been incorrectly settled or may even have lapsed. Should this be so, a better credit score can be achieved by disputing the data directly with the agency. The appropriate supporting information should also be provided. For example, debts that have been cleared by chapter 7 bankruptcy that still show as active can be rectified by sending a copy of the bankruptcy agreement.
Fix Bad Credit Problems By Paying Punctually
Although the above methods can be used to rebuild credit fast, they are only effective if that person has always complied with the terms and conditions of their agreements. The most effective do-it-yourself credit repair method is paying debts on-time now and in the future. In order to get a higher credit score, it is necessary to make a payment towards both revolving and installment debt. There are bad credit car loans, poor credit mortgages and credit repair credit cards available that can help with this process.
Fixing Credit with a Legal Credit Repair Company or Not?
A credit report provides a snapshot of that person's credit history and it is open to change. With the exception of chapter 7 bankruptcy, bad credit will no longer be held by credit reference agencies once 7-years have elapsed. Although a legal credit repair service can help with improving credit scores, their service isn't essential. Rebuilding credit is largely dependent upon the debt repayment behavior of the individual. What's more, any errors can be rectified without the need for professional help.
Sources
Pulliam-Weston, Liz. (March 18, 2010). "7 fast fixes for your credit score." MSN Money.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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