If you type "credit repair" into Google, the Federal Trade Commission is the first site that comes up in the natural listings. And the first thing they talk about is how people really should fix their own credit.
What's the point? Because there are so many scam artists out there who claim to be experts on credit repair and take advantage of people who don't know what's going on. And they lie about the services they offer in every way they know how. The worst part, besides losing your hard-earned money, is that they might hurt your credit score even more.
There are many trustworthy organisations that can help you fix your credit score. Like local civic groups, churches, and real non-profits that can help you find your way through the maze. Our credit system has a lot of twists and turns, which can be hard to understand if you don't know the terms and laws that govern it.
And it does take some hard work on the part of the consumer. And there are way too many businesses that give credit just to make a sale and don't care if the customer will soon be unable to pay back the debt. So getting into trouble is a lot easier than getting out of it.
Why is it so important to have good credit? Because the interest rate on any loans you take out will depend on your credit score and other things. It can be worth 3 or more interest points (on a new car the good credit rate is around 8 percent so if you have a low score that could mean up to 12 percent ).
Even insurance companies and employers are starting to use credit scores to set rates and decide whether or not to hire someone. Even car insurance can cost more if you have a low credit score. And that great job offer might not come either.
Credit repair companies that make promises that are too good to be true are often just taking advantage of the fact that most people don't know much about how credit works. A few years ago, it got so bad that Congress passed a new law to help stop the chaos. Even though I don't like too much government, they did help the consumer in this case.
Anyone who says they can get rid of your bad credit, bankruptcy, liens, or judgements for sure is not being honest. Any company that offers to make you a new credit file, give you a new identity, or ask you to apply for a new social security number is not helping you and can put you in jail.
The good news is that you can improve your credit score, and it will probably happen sooner than you think. To get started, all you have to do is learn a little bit about how credit works. The first thing to do is decide to start.
You can ask for a free credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) once a year to get a good idea of what your credit score is right now. Visit www.ftc.gov/credit or call 1-877-322-8228 and ask for information to find out how.
The next step is to take an honest look at what you owe, how your payments are going right now, and how much money you have to work with. Once you have a clear idea of how much you owe, you can make a realistic monthly budget. You can make a good plan if you have all the facts.
The Federal Trade Commission's website has clear instructions on how to fix wrong information, how to get in touch with credit bureaus, and what can be disputed on your credit report. Read the material slowly and carefully.
Your credit report could have wrong information that can be taken off. You can also talk to your creditors to set up a payment plan and other arrangements that will help you get back on your feet. Most businesses will be happy to work with you.
Be careful, though, if you're dealing with a collection agency. Most collection companies work on a percentage basis, and if you don't keep an eye on them, they can take advantage of you. Visit the Federal Trade Commission's website to find out what they can and cannot do: http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm
Depending on the person's situation, most people can improve their credit score in 30–60 days. People have gotten their scores back up to the high 600s or low 700s in 12 to 15 months, which is great. Since your credit score can affect the interest rate on any large purchase, I would wait until I had a good score (this can save you thousands of dollars over the life of a loan or purchase agreement).
