What You Need to Know About Credit Repair

In 2004, I was 26 years old and $46,000 in debt. So that November, I declared bankruptcy. Thankfully this held off the creditors, but it demolished my already damaged credit.

A couple years later, I began to seek ways to raise my credit score . I hired a reputable credit repair firm. And within a year, 11 items had been deleted from my credit report and my score rose by 200 points.

In the process I learned a ton about the reality of credit repair, and the credit repair industry. The good, the bad, and the truly ugly.

The bad and the ugly dominate this business. If you're looking to raise your credit scores, chances are you are not in the best state of mind. Unscrupulous lawyers and companies have been known to take advantage of people with financial troubles looking for some relief.

Here's what you should know to avoid getting conned.

First, "Credit Repair" isn't like car repair where you can depend on a skilled mechanic to fix up your engine. It's a legal process based on the Fair Credit Reporting Act of 1996. This law gives any consumer the right to dispute the accuracy of anything on his or her credit report. If the credit bureaus cannot verify the items within 30 days, they are required to delete them.

Like any legal process, there is no guarantee that the items will be deleted. If the credit bureau verified your info, they send you a letter saying so. That's why it took a full year for the 11 items to be taken off my reports. Some months the dispute letters were successful, with one to 3 items being deleted at once. Other times, 3 to 4 months would go by without getting a single item deleted. It is a process that requires patience and diligence.

Therefore, any credit repair company promising fast results is full of baloney. It's true that you may see some items deleted within a month or two, but you can't say for sure.

Any company charging a large up front fee is also suspicious. Realistically, you can draft up your own dispute letters without any lawyer or company's help. I chose to work with a law firm because their rates were reasonable and I believed the credit bureus would respond more quickly with legal representation. I've known people who have tried it on their own and been ignored; all of my disputes were answered, even if items were not removed.

However, you should never ever pay a large fee up front to a company you don't know, especially if you are already in financial trouble.

If you do hire a credit repair company (which should be a law firm) to represent you, they are going to need a copy of your credit report in order to know how to dispute the negative items on your account. For this reason, I highly recommend researching any credit repair company thoroughly. Check them out on Yelp, Google, and the Better Business Bureau. Look for detailed client testimonials.

If you are patient and do your due diligence, a quality credit repair company can have a tremendous impact on your credit score and your financial future.

Seth Jared is a blogger who writes about credit cards for college students and web hosting comparison.

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