Credit Repair 101: What You Need to Know About Fixing Your Credit Score and Avoiding Scams

Credit repair agencies promise to help consumers improve their credit scores by disputing negative items on their credit reports. While these companies may be able to help some people, it’s important to be aware of their limitations and to consider the potential risks before signing up for their services. In this article, we’ll discuss what people should know about credit repair agencies and how they can fix their credit on their own.

First, it’s important to understand that credit repair companies do not have any special powers or access to information that consumers do not. The Fair Credit Reporting Act (FCRA) gives consumers the right to dispute any inaccurate or incomplete information on their credit reports. This means that consumers can take the same actions as credit repair companies to improve their credit scores.

Additionally, credit repair companies often charge high fees, and many consumers have complained of being charged for services that they did not receive. Some credit repair companies have even been sued by the Federal Trade Commission (FTC) for falsely claiming that they can remove negative items from consumers’ credit reports.

So if credit repair companies aren’t the best option, what can consumers do to improve their credit scores on their own? Here are a few steps that can help:

1. Obtain a copy of your credit report: Under the FCRA, consumers are entitled to one free credit report per year from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion). You can request your report at www.annualcreditreport.com
2. Review your credit report for errors: Look for any errors or outdated information that may be negatively affecting your credit score. This could include incorrect balances, late payments, or accounts that do not belong to you.
3. Dispute any errors with the credit reporting agency: If you find any errors on your credit report, you can dispute them with the credit reporting agency. The agency is required to investigate your dispute and correct any errors.
4. Pay your bills on time: Late payments can have a big impact on your credit score. Be sure to pay all of your bills on time to help improve your score.
5. Keep your credit card balances low: High balances on credit cards can also have a negative impact on your credit score. Try to keep your credit card balances low and pay them off in full each month if possible.
6. Don’t close old credit accounts: having a long credit history is good for your credit score, so avoid closing old credit accounts you don’t use anymore.
7. Be aware of credit limits: When requesting credit limit increases, be aware that your credit score may be negatively affected if you have too many requests in a short period of time.
8. Consider seeking credit counseling: If you are having trouble managing your debt, credit counseling can help you develop a budget and a plan to pay off your debts.

It is important to know that Fixing your credit score is not a one time fix and it takes time and consistent effort to maintain and improve. Also, note that there are no shortcuts or magic fix when it comes to credit score. Be wary of any company that promises to remove negative items from your credit report or improve your credit score quickly.