How Do Credit Repair Companies Work?

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Many of these companies advertise the ability to get multiple negative items removed off of reports and helping raise your credit score.  Some even advertise that your credit score could jump 100 points over 3 months.

Unfortunately this has become an industry rife with scams taking advantage of people who are desperate to get their scores raised. To protect yourself from being scammed it is important to understand how these credit report companies work.  Having worked for a credit repair firm I will provide you with some of that knowledge.

First off you need to know that these companies don’t have any magic formula and any work they perform you can do on your own. So why hire these companies to do this work?   People hire them because they don’t want to spend the time to write the letters and follow up all the time to get items removed.

Companies can’t guarantee any results, they are very good at their wording so make sure you read the terms and agreement.  Some credit repair companies will offer what are called warranties where if you aren’t satisfied with your results you could get a refund of your money spent.  How it typically works is that they take the items deleted from your reports give them a dollar amount and subtract that from how much you spent.  

Yes credit repair companies have been successful at getting items off of reports for years, but many times these are older items that are listed.  So as those items are deleted those count to that whole warranty.  Also if they happen to delete just one item off of all three reports then that counts not as one deletion but as three.  Even duplicate negative listings on your credit report are treated as two separate items when removed.  That advertisement of averaging nine deleted items in three months well that is how it can happen.  

What about helping raise your credit score? While having negative items removed generally can help you raise your score, sometimes having a listing removed will actually result in credit scores going down. I remember having people call me up and yell as they said, “My score went down what happened??” One of the little facts that aren’t told to consumers is that having a credit listing is better than having no credit. So when that listing is removed your credit score might actually drop at first. The score will rise over time but this is something that you should be aware of.

If the company you hire is sending out letters to creditors at times you might get the letter sent back to you.  This is because the addresses they send the letters to might not be correct anymore.  

When you open the letter you could be surprised with what you see.  The letters that are sent to the credit bureaus and creditors are signed in your name and made to look like it was written by you. Some of the letters have misspellings, horrible grammar and at times can make no sense.  They do this to avoid some of the letter screeners who look for professional letters to dismiss as frivolous.  And don’t think you didn’t give them permission to do this, when you signed the contract you gave them permission to do so.

If you decide to look for a company to do the credit repair be aware that it isn’t a quick fix.  Many times it will take at least a year or more to get things to where you would like them if you are lucky.  When choosing a company look for one that has been in business for a long time, isn’t a quick start up and can answer some of your questions.  

There you go a simple and concise explanation of how credit repair companies can work. I hope this can help you out in making a good decision in repairing your credit.


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