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You may have seen advertisements from credit repair companies that promise they can get you a 100-point boost in your credit score. If that sounds fishy to you it's because it is. No legitimate credit repair company will promise results like this. You need to stay away from anyone that makes these kinds of promises.
Here’s what you need to look for to know that the credit repair company can be trusted.
They want to learn your story. It's critical for the credit repair company to learn why it is that you want to dispute an item in your report. This is so they can make sure the credit bureaus uphold the three standards of accuracy, fairness and full substantiation.
They want you to understand your rights. Before you sign its contract a trustworthy credit repair firm will review your consumer credit rights with you and if you have any questions regarding them it should be able to provide you with answers.
They can explain things in detail. A good credit repair company knows exactly what they can do and can’t do for you. It should be able to thoroughly explain the services it can provide so that you will understand exactly what to expect.
As we have noted there are also credit repair companies that can't b trusted. Here's a video with the top 10 warning signs of companies you might want to avoid.'
Get your credit report – free
As noted above, you are entitled to get your credit reports free under the Fair Credit Reporting Act. You can also get your credit score free from any of the three credit reporting bureaus or on sites like CreditSesame and CreditKarma. The scores you can get from any of the sources will not be your true FICO score but it will be close enough for you to know where you stand. As an example of this, you might get a credit score of 585 from, say, Credit Sesame while your true FICO score is 575.
Frequently Asked Questions about credit repair
Q. Are credit repair companies legitimate?
A. There are definitely legitimate repair companies. Three of the best-rated are Lexington Law, CreditRepair.com and The Credit People. Ones you should probably avoid include Credit Nerds, DSI Solutions and iHome Easy Credit.
Q. Why not to use credit repair services
A. If you get your three credit reports and find there are only a few errors that could be negatively affecting your credit, you really don't need a credit repair service. You can dispute them yourself. However, if there is the same error on several of your credit reports you must dispute it with all the credit bureaus. In other words, disputing an error on one of your credit reports will have no effect on the others.
Q. How much does credit repair cost?
A. credit repair firms generally charged by the month until they have resolved all of your issues. For example, Lexington Law charges $79.95, $99.95 or $119.95 a month depending on your credit needs until it has delivered all of its services. Credit repair.com charges a flat $99.95 a month until it has resolved all of your issues.
Q. Why is credit repair important?
A. Credit repair is important because bad credit can cost you a lot of money. A low credit score of 580 or below means you’re being charged higher interest rates on your credit cards, you’re paying higher insurance premiums and if you can get a mortgage it, too, will have a higher interest rate.
Q. Are credit repair fees tax-deductible?
A. You might think that if you hire an attorney for credit repair you should be able to deduct those costs. Unfortunately, you can't. This is because legal fees are basically personal in nature and can’t be deducted. You also cannot deduct any costs related to getting your credit reports or your credit score.