Can credit repair get rid of debt?

They and you can contact creditors and credit bureaus to correct inaccurate information in your credit reports. Unfortunately, the only reliable way to repair credit is to ask credit bureaus and creditors to erase inaccurate data and pay their bills on time for months or years. Unfortunately, none of those promises are true. Credit repair companies offer to “fix your credit” by removing negative elements from your credit report.

Offer to file negative item disputes on your behalf with credit bureaus and have them removed. What is the problem with this approach? The whole strategy is based on exploiting a loophole in the credit system. When precise items are removed, it's only temporary for a few months, at best. If you are tempted to hire a credit repair company to dispute late payments on your behalf, keep in mind that your charges can amount to hundreds or thousands of dollars.

Credit repair companies are also not legally allowed to guarantee that they can delete information from their credit reports. And if the late payments are correct, the credit repair company or anyone else will eliminate them. It's important to have a good credit rating. Without it, you may be denied low-interest loans and lines of credit, a job, rent, and even an insurance policy.

If your credit report shows a history of debt problems or contains errors, you may consider using a repair service to “clean up” it. However, before you pay, learn how these companies operate. In the vast majority of cases, hiring an external company will only waste your money. Precise elements of your record cannot be disputed or removed before the statutory deadline (seven years for most negative items).

For example, if you didn't pay on your credit card or didn't pay a student loan, your dispute request will be denied. Keep in mind that there is nothing a credit repair company can do for you that you can't do on your own. Late payments can stay on your credit reports for up to seven years from the date of delinquency, according to the Fair Credit Reporting Act (FCRA). This ratio represents the amount of credit you are currently using divided by the total amount of credit you have available.

Other factors considered include your credit mix, payment history, length of credit history, and new accounts. You just need to be willing to spend time reviewing your credit reports for negative or inaccurate information, contacting credit bureaus to dispute that information, and follow up on those disputes to ensure they are being investigated. With a positive title like “credit repair,” it's no wonder people fall prey to fraudulent practices by credit repair companies. If you detect an error or inaccuracy in your credit reports, you will need to file a dispute with the creditor or credit bureau reporting the information to have it corrected or deleted.

This is where the credit repair service asks you to request an Employer Identification Number (EIN) from the Internal Revenue Service, which has the same number of digits as a social security number. However, you will pay a fee to the credit repair company to act on your behalf and request the removal of negative information. Under the Fair Credit Reporting Act (FCRA), credit bureaus and lenders must ensure that the information they report is accurate and truthful. Everything a debt collector, creditor, or credit bureau does with respect to a credit report will be based on the FCRA, says Joseph P.

The first is that if the information the credit repair service is disputing is correct, they will report it again the next time they send data to the agencies. The FICO 9 credit rating model, for example, does not include paid collection accounts in credit rating calculations. .