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Can credit repair actually hurt your credit?

The importance of a good credit report cannot be overstated. The impact of having a low credit score can be felt in your inability to get a loan, to be offered a competitive insurance premium, to be the recipient of favorable interest rates, and even to be able to get a job. If you check your credit score and find out that the number could be much higher, you may be tempted to get a score boost from a credit repair company. And no doubt about it, this possibility can be very tempting. The question is: are credit repair services really your best option to improve your credit?

How does credit repair work?

Credit repair is generally performed by a credit repair outlet that, in exchange for payment, attempts to have some information removed from your credit report. These service companies market themselves as an important tool that people can use to improve their credit score.

These firms advertise their services as being specifically designed to help you remove information on your credit report that may be either inaccurate or not verified.

How do credit repair companies achieve what they promise?

To modify your credit score, these credit repair companies must establish direct communication with the credit bureaus. They may also get in touch with the companies that furnished credit information about you to the credit bureaus. These are companies such as debt collectors or financial services firms like banks and issuers of credit cards.

With your information on hand, the credit repair company will then attempt to have the credit bureaus or other companies that furnish information about you to them, delete or modify information that is in your credit report in order to make it look more favorably.

The way they go about it is with phone calls, emails, or through the United States postal service. Their strategy is simple: send a large number of letters disputing the same item on your report with the hope that the bureau or lender will fail to act against this dispute within the thirty-day time limit specified by the Fair Credit Reporting Act which would result in the account then getting deleted.

Can credit repair actually end up hurting your credit?

If you go by the claims made by credit repair companies as to the millions of items they have been able to delete from their customers’ credit scores, you may feel confident that relying on their services is a good idea that will yield beneficial results for you.

However, the reality is that there is insufficient reliable data to accurately measure the effectiveness of these services. There is no way to find out how many of the disputes they have tried to have deleted from people’s credit reports have actually been deleted or even how much have people had to pay for these credit repair services.

What can you do to repair your credit?

Nobody is more interested in having the best possible credit score than you. That is why you should endeavor to work on improving it. Also, take the time to look for a reputable credit repair company that will perform thorough credit analysis and help you remove such items as foreclosures, repossessions, judgments, tax liens, and settlements. This way you will see a real difference in your score.