For millions of Americans, poor credit scores are a limiting factor in the pursuit of financial freedom. If you would count yourself among this group, then it’s important that you learn about credit repair and the options you have. You may be surprised by what you learn.
The Truth About Credit Repair
If you browse the internet on the topic of credit repair, you’ll run across a lot of misinformation. One “guru” will tell you one thing, while another will tell you something totally different. This makes it frustrating and challenging to uncover the truth. Having said that, here are some basic things you should know about:
- Credit Report vs. Credit Score
One of the biggest misconceptions has to do with the difference between a credit report and a credit score. While these terms are often used interchangeably, they’re totally separate things.
- Credit report. A credit report is a detailed history of your credit activity, compiled by three different reporting bureaus: Experian, Equifax, and TransUnion. A credit report is a stand-alone document and lenders review it before determining whether or not to extend a loan offer to you. You’re personally entitled to one free copy of each credit report every 12 months. You can request it at com.
- Credit score. Your credit score is the number that is spit out of an algorithm that measures your overall credit risk based on the information found in your credit report. In most cases, your score is determined by your payment history, amounts owed, length of credit history, new credit, and mix of credit. You can typically access your credit score for free as often as you’d like using a service like com.
While your credit score and credit report utilize much of the same information, they aren’t the same thing, Make sure you realize this when you think about credit repair.
- DIY Credit Repair
Credit repair has everything to do with your credit report and nothing to do with your credit score. When you’re attempting to repair your credit, the goal is to improve your credit report by removing negative strikes. Specifically, you’re trying to remove inaccurate negative marks (since it’s very tough to remove accurate negative information).
It’s also important that you know that you have the ability and right to repair bad credit on your own. Credit repair companies can streamline the process and help you ensure you’re doing everything possible to correct inaccuracies, but so can you.
- Credit Repair Companies and Guarantees
When it comes to working with a credit repair company, you should understand that not all of them are reputable (or worth your time). You need to do some research and read independent reviews and ratings before identifying the ones you would consider working with.
On a related note, be wary of any company that guarantees they can fix your credit report. There are many untrustworthy companies on the market that make lofty promises, charge hefty upfront fees, and fail to live up to their claims.
- Time and Cost of Credit Repair
There’s no such thing as overnight credit repair. It takes a considerable amount of time to rebuild a poor credit history and you have to be patient. At the very least, it’ll take a few months for you to see noticeable results – be patient.
Putting it All Together
As you look into credit repair, make sure you’re doing your own research and verifying any claims you read online. The more you know, the less likely it is that you’ll find yourself in a compromising situation.