If you want to raise your credit score…should you use one of those “credit repair” companies or could the lender help? The answer is below!
The Consumer Credit Counseling Services of Orange County, a local non-profit, suggest you do not use a credit repair company. They say you can do it on your own. But it is complicated and time consuming. Another solution: Some lenders and loan consultants are very experienced and want to help you both get a loan and raise your score in the process. They know the techniques to remove derogatory information. They may even get on the phone with you to negotiate down a collection. Why do they do it? Because they have the experience, want to help and they have a customer for life.
Here’s what a credit repair company will do
1. The credit repair company disputes everything on your credit report asking you to sign letters they have already written on your behalf to the creditors. Their goal: to get as much of the negative information removed, regardless of whether it is accurate or not. (Depending on the severity of your bad credit, this may take 2 to 9 months.)
2. The credit repair company will continue to monitor and send letters on your behalf to the credit agencies to get the items removed or outstanding balance reduced.
But there are (hidden) problems with credit repair companies:
- When the credit repair company disputes any information, this challenge appears on your credit report as being in dispute. Any lender considering offering you a loan will need the in-dispute item(s) to be resolved before they will lend. Otherwise, the lender will DENY your loan.
- Some credit repair companies charge you a fee each month they work on it. The longer the credit repair company is working to resolve or remove the issue, the longer they receive fees from you.
This is what some lenders will do
1. The lender will help you remove negative information from your report. They can tell you if derogatory information has been incorrectly included on your report. Medical collections are an example.
2. The lender will walk you through the process, and send you examples of how to write a letter to the company to dispute, because the request must come from you.
3. The lender may even go as far as getting on the phone with you to negotiate on your behalf. While you may not be able to get anything done, some loan consultants have the experience and skills to get collections waived or reduced.
4. Once the negative information is removed, the lender will process a rapid re-score, which takes 1 to 4 days and will show current credit scores. There is a cost for this, but some lenders pay for it as a courtesy.
5. Removing damaging information and a re-score may occur within 2 to 4 weeks.
6. The lender is helping you for free. WHY? Because they want to help you get a loan, while the credit repair company wants their commission.
So what do you think — the lender helping with your credit score in 2-4 weeks or the credit repair company requiring 2 to 9 months? You decide which is better.
Answer: the Lender
Every credit situation is different. If your credit is very bad, it will take longer to improve. You may not simply remove “unflattering” information on your credit report. You may have to pay off collections, deal with the issues, and pay your bills on time, which may take months or years. Best scenario: don't get behind in your payments in the first place, and resolve issues before applying for a loan. In time, you can repair your credit and may eventually be able to obtain a mortgage loan.
If you want to know the lenders that will help for free, please contact me.