How Does a Credit Repair Service Work?

Having poor credit can land you in various unwanted situations. At some point, you may even be struggling to get a place to live or a company to work in. Therefore, a credit repair service helps you become a better applicant by improving your credit.

What Is a Credit Repair Service?

A credit repair service helps you improve your credit score in return for a fee. They handle several matters on your behalf and work with the credit reporting agencies. However, they’re not the same as credit counseling agencies. A credit counseling agency is only responsible for reviewing your finances and credit reports, helping you understand different ways to improve your credit.

How Does It Work?

A credit repair service works with different institutions to ensure your standing as a candidate for loans is improved. One of the primary services in this equation is that of your credit bureau.

So initially, a credit repair company will request a copy of your credit reports from all the big credit bureaus such as Equifax, Experian, and TransUnion. The company will particularly pay attention to any negative remarks on your reports, such as bankruptcies, tax liens, and charge-offs, etc.

Once they have carefully reviewed the reports, they will create a plan to somehow convince creditors to eliminate those remarks. The plan can also include sending dispute letters or requests to confirm or validate a certain piece of information.

In some cases, the company can also ask you to apply for a new account to add something positive to your reports. However, opening a new account is not recommended if you’ve had trouble managing credit in the past.

How Long Does the Process Take?

Once a credit bureau has received a dispute from a credit repair service, it typically takes 30 days to investigate information. As soon as they’re done investigating, they are required to get back within five working days of completion.

The Bottom Line

While there are certain ways to improve your credit on your own, most people eventually resort to a credit repair service. The best way to improve your credit on your own is to avoid late payments and not get into any unnecessary situations by applying for credit you don’t need. However, it’s hard to get rid of negative remarks once they’ve set the tone of your credit reports, which is why hiring a credit repair service is sometimes the only way to improve your credit.