The credit repair company…OMG!
In any good-sized community, you will no doubt see ads for credit repair companies. And perhaps you have considered hiring one. Before making that decision, let me tell you a bit about what they are and what they can do for you.
The first and most important thing to know is that no credit repair company can guarantee that they will be 100% successful in cleaning your credit report. They are bound by the same laws that are discussed in this book. They may take a different approach than I suggest you follow in this book. A few of these alternate methods will be discussed a bit later in the chapter. For now, just be aware that these alternate methods are no more a guarantee of success than the simple, straightforward methods presented in this book.
Credit repair companies are business that charge a great deal of money to clean up your credit report. They charge anywhere from $500 to several thousand dollars for their service. Due to the large amounts of money that can be made and a large number of people in need of this service, this is a business that attracts many con artists. Many credit repair companies set up shop, make lots of money, and then skip town without doing the work they promised. If you choose to work with one, be sure the company has been around for a while. Call the Better Business Bureau to check them out. And ask for references from the company and check them out too.
Tricks Of The Credit Repair Trade
A legitimate credit repair company will take the time to explain your rights under the credit repair laws and what results can reasonably be expected. The company should tell you that it cannot promise to clean your credit report 100%. If a credit repair company tells you otherwise, they are making exaggerated claims. In fact, if you deal with one of these companies. you will often find that they offer a guarantee that states that they will “improve your credit or your money back”. It sounds good until you think about it. All it is really saying is that they will make your credit better than it was when you started. And this is a very easy process. All that needs to be done is something as trivial and unbeneficial as changing a 60-day late payment to a 30-day late payment. It doesn’t help you but it does meet the requirements of the guarantee.
In addition to following the techniques described on this site, credit repair firms use two additional techniques to help improve your credit; one legal and the other not legal.
Letter Blitz: The letter blitz is a totally legal credit repair method that uses the fact that a credit reporting agency must respond to an investigation request in “a reasonable period of time” as a loophole to help get your credit repaired. The credit repair company will literally blast the credit reporting agency with so many letters that some will end up being greatly delayed. This means that the credit reporting agency will have responded to that letter in an unreasonable period of time. When this happens, the credit repair company uses the law to its advantage. It reminds the credit reporting agency that when this happens, the negative item must, by law, be removed from your credit report. In the past, this technique was very effective.
But it is now losing effectiveness for several reasons, First, credit reporting agencies are becoming so computerized that the typical response to a credit repair request that many fewer requests are falling through the cracks than ever before. And, second, the law allows the credit reporting agencies to disregard frivolous requests. If their computers show that 10 requests are made to investigate a single item within days of each other, they will often dismiss all these requests as trivial and not investigate the claim at all. And there is nothing you can do to change that. It is within their rights under the law, So, multiple letters can and sometimes do backfire and end up hurting you rather than helping you.z