This post is sponsored by our friends at Lexington Law Firm.
If you have gotten yourself into financial trouble and as a result have dings on your credit reports, it can be easy to lose hope. It is also easy to fall prey to credit repair scams. Many times these credit repair companies promise you the world but never end up delivering. As a result, you are out more money, have a worse credit report and credit score, and are living with even more stress.
Because of this, I decided to write about what you should look out for when looking to avoid credit repair scams. Not all credit repair companies are trouble. Many can help you improve your situation. Here are the tips to help you find a reputable credit repair company to help you get your finances back in order.
3 Simple Tips To Avoid Credit Repair Scams
#1. Vet The Company
Before you agree to anything with any company, do your homework and make sure they are a reputable company. Trust me, the more work you do here, the less headaches, stress and potential disappointment you will experience later on in the process.
How do you vet these companies? Your first step is to check out the company. Find out how long they have been in business and what their expertise is in. From there, you want to find out others experiences with them.
Thanks to the internet, this is a lot easier than it used to be. For example, if the credit repair company is Lexington Law, you could do a quick search for Lexington Law reviews. This will give you an idea of what others who have used the service experienced.
#2. Credit Fix
Once you vetted the company and feel comfortable with them, the next step is to understand the credit repair services they offer and their process. It is critical to understand how they work with creditors to repair your credit and how involved you are in the process.
It is also important to know how the long the process will take. There is nothing worse than having different expectations from the start.
After you know the process for repairing your credit, you need to know how much it will cost. Many times you can spot a credit repair scam when it comes to pricing. Most companies that are not trustworthy will have you pay for all of your work in advance.
This is a big red flag. Look for a company that charges you for work it has already done.
From there, you want to understand how long you are working together. Is the fee charged an annual fee or month to month? Can you cancel anytime?
Knowing this ahead of time will save you headaches down the road.
Key Signs To A Credit Repair Scam
I just mentioned that paying before any service is provided is a major red flag when it comes to getting help with your credit. But it is not the only one.
There are two others that you should look out for as well.
- Guaranteed Removal of Negative Items. No company that is worth working with will make this claim. They will work to try to get inaccurate, negative items removed from your credit report, but they should not guarantee it. By law, you are entitled to a fair, accurate, and substantiated credit report. Nothing more; nothing less.
- Guaranteed Increase In Credit Score. While the goal of fixing your credit is to improve your credit score, there should be no guarantees made on the amount of increase or the time it will take to rise. You should also remember that removing inaccurate items is only 35% of your credit score. To get the best credit score you can, you need to keep your credit balances low, reduce or eliminate inquiries, pay your bills when they come due, and respect your credit history by keeping long-lived credit cards active.
These aren’t the only red flags you should look out for, but they tend to be the easiest to spot and occur most often.
In all, there is a lot to look out for when looking for a credit repair company. Unfortunately, the few bad apples dominate the headlines and make the entire industry look bad. But if you follow the steps I outlined above and pay attention to the red flags, you should be able to find a high quality company.
And doing so is worth the work on your part. By getting help, you increase the odds of making your credit report look better to potential creditors and as a result, increase the chances of raising your credit score.
The final result will be better finances and less stress around money for you, making taking the step to repair your credit worth it.
[Photo Credit: stevepb]
Hi, my name is Jon and I run Penny Thots. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.