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How Repairing Your Credit Can Save You Money

Monday, July 26th

How Repairing Your Credit Can Save You Money

Over 220 million Americans have a bad credit rating - and it costs them thousands of dollars each year in the form of higher interest rates on everything from loans to credit cards.

Credit reports have become the gold standard for determining a person's financial worth. In some instances, employers even use credit reports and credit scores during the hiring process.

There are several ways in which a poor credit history and low credit score can affect finances.

  • Higher Interest Rates. Persons with poor credit reports and low credit scores (between 300 and 500) are subject to higher interest rates for loans. Because consumers with a bad credit history are a higher risk to lenders, an attempt to recoup as much money up front usually is reflected through a higher interest rate. Of course, it's also possible that loans from various creditors will be denied entirely. When that happens, consumers are left with little recourse.
  • Credit Cards. Approval for new credit cards will be difficult if not impossible with a poor credit rating. Consumers who are lucky enough to get a new card will find themselves saddled with a higher-than-average interest rate, as well as a low spending limit.
  • Vehicle Insurance. Vehicle insurance companies have jumped on the bandwagon of reviewing potential clients' credit histories prior to agreeing to insure them. Roughly 92 percent of all insurance companies research a customer's credit history prior to insuring them. Consumers with poor payment histories or a dismal credit score can expect to pay higher premiums. Data indicates that persons with poor credit are more likely to file claims and are therefore a higher risk for insurers. Conversely, those with excellent credit histories and credit scores generally have fewer accidents and tend to pay premiums in a timely fashion.
  • Employment. With 69 percent of all U.S. employers admitting to checking credit reports as part of the hiring process, those with a bad credit history can be left out in the cold when it comes to landing a new job. Under the Fair Credit Reporting Act, employers must first seek permission prior to requesting a potential employee's credit report. Those who suffer from bad credit or a dismal credit score can find themselves being passed over for new jobs as well as promotions with an existing employer.

Having poor credit is not the end of the world. With a little time and a lot of hard work, a bad credit history can be turned into a positive credit history.

The first step one should take toward repairing a bad credit history is to review copies of your own credit report. Reports can be requested through the three major credit reporting agencies: Equifax, Experian and TransUnion. The Fair Credit Reporting Act mandates that all consumers are to receive one free annual credit report from each of the three agencies.

Consumers with poor credit histories also should consult with a consumer credit counseling service, which can help start the process of repairing credit. These services work by helping consumers to consolidate loans and other debt into monthly payments the consumer can afford. There are many such agencies on the market today, but consumers should be careful when selecting one, as not all are created equal.

The Best Credit Repair Companies Compare Credit Repair Companies Compare Credit Repair Company Reviews What are the best Credit Repair Companies Best Credit Repair Company Reviews

Credit Repair Company FAQ

Credit repair is just like it sounds: a process by which your credit history and score are improved. This happens through negotiations with creditors, removing negative information reported to credit bureaus, and other strategies.
That will depend on several factors: your state of residence, the type(s) of issues you're looking to resolve, and so on. Most credit repair services offer a free consultation, to determine if you're eligible for their help and which approach to take in your specific case.
Credit repair services typically charge a one-time setup fee and monthly service fees. One-time fees range from $19 to $195, and monthly fees from $29 to $159.95. You might get a discount if you sign up as a couple, or if you're a current or former member of the military.
Most of the actions taken on your behalf by a credit repair service can be done on your own. But, how much time do you have? Are you typically available to make calls during business hours? Hiring a credit repair provider can save you a significant amount of time and hassle. And, there's something to be said for letting the experts do the work, using their knowledge and connections to ensure that your credit repair process is done effectively.
The first step with any credit repair service will likely involve a thorough review of your credit report. Your representative will discuss your credit history in detail, help you identify actionable items, and give you a recommendation for which services are best suited to your needs. From there, credit repair providers work diligently to address the issues and resolve them, for as long as you maintain your subscription to their services.
Most services state that you'll see negative items removed from your credit history within the first 90 days. The amount of time it will take to see an improvement in your credit score will depend on your particular circumstances.
Sometimes. A few credit repair services guarantee that you'll see those deletions within the first three months, and you'll get a refund of any fees paid if that doesn't happen. Other providers actually specify a minimum credit score improvement. It's a good idea to know exactly what you'll get from the service you select, before you sign up as a member.
Credit repair is legitimate: working with a reputable service, you can absolutely see big changes in your credit report. On the other hand, there are companies that don't deliver what they promise. Be sure to check out the reputation of any credit repair service you're considering: customer feedback, number of years in business, and the service's BBB rating are all helpful indicators of a provider's trustworthiness.

Compare Credit Repair Companies

Select any 2 Credit Repair Companies to compare them head to head

best-credit-repair-companies
  • Sky Blue Credit
  • Ovation Credit Services
  • Credit Firm
  • Credit Saint
  • MSI Credit Solutions
  • The Credit Pros
  • Lexington Law
  • The Credit People
  • Credit Repair
  • Credit Assistance Network
  • Pyramid Credit Repair
  • E Credit Attorney
  • Credit Repair Consultants
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