While looking for bad credit repair, many desperately want there to be a band-aid that will fix their broken lives. "There must be some quick and easy insider way of fixing things," some think. After all, there are so many advertisements online, on TV and in newspapers offering 100% guarantees and removal of the worst kind of blemishes, including bankruptcies, liens, judgments and bad loans. But are they legit?
According to the FTC, there are many credit repair scams out there. Many of these companies request as much as $3,000 upfront to settle your accounts, negotiate better debt repayment deals and erase all blemishes on your credit report. Credit repair companies have become a $7 billion/year industry, but not all parties can be trusted. You should never have to pay before you receive any services, as the Credit Repair Organizations Act mandates that bad credit repair services only charge when they have completed the services promised. As well, you should not trust someone who will not give you practical advice on what you can do on your own to repair your credit. If the company recommends that you not contact the credit bureaus directly, suggests you can get a new credit identity through an "Employer Identification Number" or advises you to fraudulently dispute even the legitimate information on your credit report, you should steer clear of their operation.
Here are some DIY tips for repairing bad credit. If you cannot afford a credit repair attorney and feel up to the challenge yourself, then you can use your sales and negotiating skills to get items deleted or at least changed in your favor on your credit report. First thing is, never make arrangements over the telephone. It's always best to craft a well-written letter instead and be sure you write this letter before you give the creditor any money or you will have lost your power to negotiate! If you have a "charge-off" listed on your credit file, then you can sometimes offer to adhere to a monthly payment plan and get creditors to replace them with "paid as agreed and on time." If you can't get that, then try for "account closed, account paid or account settled," all of which are more desirable than a charge-off. The best case scenario you could ever hope to achieve is a creditor to completely remove their account from your credit report, although it's certainly a rare best case scenario. Often with medical bills, the creditor will remove the bad credit debt if you agree to pay immediately, in full, with an additional fee or two, which will improve credit scores overnight.
If you're attempting bad credit repair on your own, then understand that there are no guarantees. However, it will only take a few moments of your time to shoot out a letter to your creditors, requesting an agreement that will take your credit report into consideration. If you have a "charge-off" from a closed account, then this could be extremely hard to get removed from your report. If the creditor is still actively trying to collect, you will have a 1 in 3 chance of getting a complete removal from your credit report. If you have an open account, like an installment or revolving loan, then there is a marginal rate of success if you offer to pay the full balance. Open/active accounts reported as "late payment" have a very high success rate of complete removal, particularly if the account is in collections. Creditors may say they cannot remove an account, but they absolutely have the power to do so. It's just that many of them are trained not to do that.
It is really nice to get a brand new credit card that has a high limit. At first you promise yourself that it is just for emergencies but before long you notice that you are using that credit card for day-to-day living expenses. To make matters worse, the problem usually does not stop with just one credit card. Slowly bad credit begins to accumulate and before long you find yourself in a world of trouble. There is not enough money to pay off the bills and interest keeps piling up. Stop living this way! There are ways to rid yourself of that baggage and find a better way to live.
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