Having good credit is essential if you want to get approved for many financial services with better terms and rates. Otherwise, you might be left with limited options and end up paying a higher interest rate on loans. Poor credit can affect your ability to get better loans, find housing, acquire certain services, and even land a job.
Fortunately, there are ways to repair your credit. Though doing so can be an uphill battle, it's not entirely impossible to improve your credit score over time. But whether you want to use a credit repair service or do it on your own is another concern.
Both approaches carry certain benefits and downsides. We've highlighted some significant factors you can take a look into to help you make an informed decision.
Understanding Credit Repair
If you're having difficulty managing your debts, your credit is more likely to be affected. In many circumstances, you may need to correct mistakes and errors on your credit report by undergoing credit repair. Errors can occur despite the credit bureaus' effort to maintain accurate information.
The errors can be missed payments you made on time, incorrect account status, or outdated information that could be hurting your credit scores. Credit repair is the most common and typically the best way to get those negative items removed from your credit report. But it doesn't allow you to remove negative information that's accurate and verifiable.
Credit repair services have several advantages that you can consider. However, it would help if you're extra careful since many of them can cost you money with little results. This can be a challenge if you don’t have extra money or worse, you don’t have a job income to finance it. Though it can be cost-effective in the long run, the outcome may also depend on your credit situation.
Take a look at the pros and cons to determine using credit repair services is the best option to fix your credit.
Fixing your credit with credit repair services is an excellent option if you want to change your score quickly. Instead of waiting for seven up to ten years for negative items to be eradicated in your credit report, you can see progress once the disputes are successful in 30-45 days.
Because credit repair services have plenty of experiences dealing with creditors, they may also negotiate for a less negative credit report on your behalf. However, it's only applicable if you're willing to settle or eliminate personal debt.
Credit repair companies have a better understanding of the factors that affect your credit scores. Thus, they can give you strategies on how to improve your credit apart from standard credit disputes.
If the creditor or lender can verify the negative items, credit repair services can't help you take them away. A credit repair company won't be a good option if you've developed low credit scores for valid reasons, such as missed payments and inability to manage your credit cards.
Also, a credit repair service may be costly. You can end up paying around $60-$200 a month, and it can be a problem if you're on a tight budget. It can't also guarantee you a boost on your credit score unless your reports contain a lot of incorrect or questionable information.
You can perform most of the things that credit repair services do on your own for little or no expense. But while it's true that you won't always need a credit repair service to fix your credit, there's a lot you need to understand in doing it on your own.
Like using credit repair services, fixing your own credit also has benefits and downsides. You can go over each of them to assess whether this option will suit you better.
Repairing your own credit can help you save up a lot of money. You can utilize those funds to pay down debts to improve your credit score or negotiate with collection agencies to eliminate those negative accounts from your credit report.
You won't have to deal with the hassle of finding a credit repair company that you can both trust and afford since you can do it on your own. Fixing your own credit will also spare you from the worries of credit repair scams.
The biggest disadvantage of fixing your credit is putting more effort into the process. You may save money, but it can cost you a lot of time. Note that credit repair isn't an overnight fix. To see any progress, you may have to spend time waiting on hold, typing up letters, and checking your accounts.
Some issues on your credit report may require research. If you fail to dispute it, even if the report's information truly has errors, it will remain on your record for seven years.
If repairing your credit on your own or with credit repair services won't suit your situation, there are other alternatives you can consider. It's given that there is no quick fix for poor credit, and it can be more frustrating if you need fast cash to cover some emergencies. In this case, you can apply for payday loans or personal loans to alleviate the current financial need.
Fixing your credit on your own or hiring a credit repair service ultimately depends on you. But the key is to choose the one that will suit both your credit situation and your resources. Regardless of your option, what's essential is you start working on it before it can negatively affect your financial future.
Tiffany Wagner is a writer and financial planner who matches people with the right financing tools to help with their personal and investment strategies. It's her passion to help her readers and clients how to achieve financial freedom. Outside finance, she enjoys going to any outdoor adventures.