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What is Credit Repair and How It Works


In recent years, the credit repair industry in the United States has been growing. Providers help millions of consumers every year. They liaise with bureaus, lenders, and collectors to correct unfair credit scores. These services save time and spare customers the hassle of DIY repair.

So, what credit scores are wrong? Both FICO and VantageScore use data from three reporting agencies — TransUnion, Equifax, and Experian. If any of the reports contain errors, these may drag the total down. Top-rated credit repair specialists on identify such mistakes, gather evidence, and dispute them formally on your behalf.


What Makes a Good Credit Fixer? 

Obviously, repair firms do not offer equal value. First, they have different service packages for basic, moderate, and aggressive repair. Secondly, the quality varies. Discover top questions to credit repair companies to compare them wisely.

Any provider will obtain your reports, analyze them, and dispute the mistakes. The pricing and additional services vary. The best providers have money-back policies — their customers get a refund if no derogatories are deleted within the first 60 or 90 days.

Overview of the Process

Credit repair includes several principal stages. In theory, every consumer may open disputes on their own. Reports are easy to download online, and the Consumer Financial Protection Bureau has free templates of letters to the bureaus. In reality, this task is laborious and time-consuming, so many borrowers opt for delegation. 

Some companies offer a free initial consultation, which is a major advantage. They will examine your case to determine possible results. Note that there are no guarantees, so the company may not promise to give you a certain number of points over a certain period. Here is how the process works.

Stage 1. Finding Reports 

By law, every citizen of the United States is entitled to a free copy of their credit reports annually. Due to the pandemic, the service is available once a week from Credit repair professionals will gather the documents for you. 

Involving all three bureaus is crucial. Every lender may share information with just one agency. A mistake in any of the reports may cause your score to plummet, so all of them are essential.

Stage 2. Line-by-Line Analysis

Next, experts zoom in on the contents to spot inconsistencies. These may range from misspellings to false events like bankruptcies or evictions. The mistakes are then prioritized based on urgency and importance.

Effects on the score vary. For example, correcting an address may have no consequences. On the other hand, payments affect 35% of FICO and 40% of VantageScore.

Stage 3. Collection of Evidence

The next phase is investigative work. Your company will have to prove that the derogatories are false, so the score is unjustified. To do this, they will collect bank statements and other documents from lenders. 

At this stage, experts may send debt validation letters that ask the institutions to prove you owe the reported amount. If you are being bothered by collectors, the company may also send cease and desist letters to stop this.

Stage 4. Formal Disputes

The errors may only be deleted by the agencies involved. Sometimes, you may need to contact two or three bureaus, which complicates the process and makes delegation indispensable. Dispute letters are usually sent by certified mail with a return receipt requested. This leaves hard evidence of the exchange, so you know exactly when your claim is received and when you should expect a decision.

The law gives every agency 30 days for its internal investigation. In the process, it will contact your lenders to verify the claim. Eventually, the changes will be accepted or rejected. The third possibility is that the institution will ask for more evidence, which prolongs your repair. This highlights the value of professional services, as experts are adept at gathering proof.

Average Duration of Repair

As you may deduce from the previous paragraph, even the simplest case should take longer than one month. On average, the process lasts between three months and a half a year. This depends on the number and nature of inconsistencies. The provider will dispute a particular number of items per billing cycle. Usually, premium packages include unlimited challenges.


Final Tip

Choose a company with a money-back guarantee. Surprisingly, some of the biggest firms in the industry do not offer refunds. Typical policies cover the first 60 or 90 days of service. They allow you to get your money back if the company fails to achieve any changes.