You probably already know about the importance of having a good credit score. It can increase your chances of getting approved for credit products and help you secure lower interest rates. If your current credit score is less than stellar, you’ve perhaps considered using a so-called credit repair company. But do credit repair services really work and are they worth it? We take a look.
What is a credit repair company?
Simply put, it’s a company that offers to improve your credit score in exchange for a fee.
A quick online research reveals a large number of these companies. Some also advertise their services in print media, as well as on TV and radio.
The way most credit repair companies claim to work is by helping you remove inaccurate or unverifiable information from your credit report.
They will start by requesting a copy of your credit report from each of the three major credit agencies (Experian, TransUnion and Equifax). After going through the report, they will devise a strategy for disputing any errors or inaccurate information in the data that may have a negative impact on your score.
Do credit repair services work?
There are currently no reliable statistics regarding the effectiveness of credit repair services. There is also insufficient data on the impact these services have on customers’ average credit scores.
That isn’t to say they don’t always work. If you can find a legitimate credit repair company that is able to identify errors, mistakes and unverifiable data on your report, they can help you get it removed. This could raise your score. Of course, nothing is guaranteed.
Many credit repair companies will claim to have helped thousands, if not millions, of people by removing negative credit entries and improving their credit scores. But short of asking a close friend or family member who may have used their services and been pleased with the outcome, there is really no way to know for certain.
Are credit repair services really worth it?
The reality is that most of the services that credit repair companies offer are things that you can do yourself. For example, reviewing and disputing errors on your credit report is something you can do without professional help.
That being said, the process of disputing claims can sometimes be tedious. You will most likely need to contact several parties, including lenders and credit reference agencies. You might also have to wait a considerable time for a response.
It’s understandable that you might prefer to focus your time on other things. That’s when contacting a credit repair company to do the dirty work for you could help.
Naturally, it is only worthwhile if there are actually mistakes or errors on your report and the credit repair company’s efforts lead to their removal.
In a nutshell, some credit repair services can work, but whether you really need them is up to you. Before you contact them, take time to really think about whether you will be getting value for your money.
Just as importantly, don’t forget to do your homework to establish whether the company you plan to use is legitimate, particularly if they contacted you offering services. You can start by checking online reviews on sites such as Trustpilot.
The kind of services that a company is offering can also tell you whether a company is credible or not.
For example, be wary of companies that guarantee to improve your credit score. Also be sceptical if a company promises to remove negative but accurate information from your report before it’s automatically removed (such as bankruptcies, CCJs and IVAs).
Finally, companies that ask you to make full payment before it provides its services is best avoided.