And it is quite okay. I am happy to provide my knowledge of working in the credit repair world with you to help you be better prepared to work on repairing your credit and/or picking and dealing with a credit repair company. It is my goal that after you read this, you will be ready to make a decision that can change your life and your credit. I plan to empower you with the knowledge that will not only help you improve your credit, but prevent you from wasting your money with a company that only wants to scam you.
Should I DIY or hire a Credit Repair Company?
Truth is, it can be quite scary trying to do it yourself if you don't know what you are doing. The new trend in credit repair company advertising is the "Pay Per Deletion" method. What they don't tell you is that after your first deletion or repair, they are going to charge you an administration or processing fee. I have seen these fees run between $75-$150 depending on the company.
Why do companies do this? They do this to make sure they secure some extra cash to cover commissions they pay to workers who only work on commission. That's right, your personal information is given to people who are not actually affiliated with the company other than pulling a percentage of your fees!
What I will do to assist you in your decision is being by telling you how the credit repair model is set up from the ground up and I will also tell you about the inner workings, what happens to your personal and critical information. After that, I will tell you about the actual credit repair process and how easy it is to do it yourself so that you DIY folks can get back on the road to financial freedom.
Credit Repair Companies:
Now a days, there are many companies to choose from when it comes to a credit restoration company for you to hire. For starters, any company that will charge you a monthly fee will take your money and not do much work while you continue to pay them for a service they aren't performing (at least not at a normal pace). DO NOT HIRE ANY COMPANY WHO CHARGES BY THE MONTH! I can't stress that enough. Too many people called me and said they had paid about $800 to a company who only got 4 things off and their credit score never went up.
Here are some laws that govern all credit repair companies, so don't get caught with any company breaking these laws or you will probably get scammed.
- No credit repair company can take ANY money up front. PERIOD!
- No credit repair company (unless they are credit counselors too) can discuss your credit score. This is a big one, because you want credit repair to increase your score, but they can't even discuss it. Be leery of any company who freely talks scores with you.
- No company can promise you any results. This includes the promise of deletions or score increases. The companies who guarantee 20 points in two weeks will most likely take your money and run.
Just remember those 3 laws and you can weed out most scam companies. There are a ton of them and everyone wants your money, so don't get caught up with any company who is just going to take your money and run. If they are legit, they will be more than happy to explain how they remain compliant in both operations and billing.
Credit Repair Company Operations:
This is how it works... When you find a company online, they will ask you to fill out a form. If they are anything like all these credit repair companies that are popping up all over the place, I'll tell you exactly what happens. This is the way some of the larger companies work too. It's about to get scary. You fill out the form and there goes your personal information. Once they have your information, it is too often stored in a computer and/or filing cabinet. Whoever gets the initial form will put it in a pool of sales people or assign it to a sales person. If it goes into a pool, many people can then see it all. If it goes to one person, that's better, but still not ideal. When I say all of your information, I mean your Social Security #, a copy of your Drivers License, a Current proof of residency, and basically anything else someone would need to steal your identity.
Why wouldn't they steal your identity? Basically when you come to a credit repair company, your score is not worth stealing. However, once you are done with them, you have a more desirable score and it only takes one disgruntled employee to take the information they are working on and run with it. These companies tend to have high turnover due to their "commission only" payment structure. I can tell you right now that I have a laptop that stopped working right and it has a few hundred identities on it. I can turn it on, open a folder, and show you tons of social security numbers, ID, passwords, and etc to make sure I could take out several credit cards or more. Just remember, it's best to keep your info to yourself.
So why do they NEED all of my info?
Credit repair companies need information that only you know because they don't actually work on your credit as a company. All they do is work AS YOU doing things that you can legally do to try and repair your credit. In a sense, they steal your identity and use that to dispute items on your credit report. If you are wondering what that means, I'll walk you through the process now. Since credit repair companies can't actually write in to the bureaus to "repair" your credit, they act like they're you sending in these letters.
The Actual Process (Credit Repair 101):
Things you will need (to give a company or to DIY): A copy of your driver's license with your current address printed on it. Some states give you a sticker and that will not work. A copy of your social security card. A W2 can work too if it's printed from and e-file linked company. A current utility bill (cable, electric, landline phone or bank statement). These must be no more than 45 days old. The last piece to this puzzle is a dispute letter.
You will also need a copy of your credit report to know which items you are going to dispute to try and get removed and/or corrected on your credit report. I'll give some links for free credit reports at the end.
Once all the copies are gathered up, the level 1 letter goes off to each of the 3 bureaus. DL, SS Card, Utility Bill, and letter are all stuffed into an envelope and sent to Experian, Equifax, and TransUnion. The level 1 letter is to establish your identity and residency.
Level 1 will look at all the names, addresses, and current/previous employers. In pay-for-deletion models, companies will make several hundred dollars just off this simple step. 2 incorrect names per bureau plus 1 old address at $25 an item is $225 + $100 = $325 for a company (yeah, don't forget the admin fee) just for printing a few pages and putting a stamp on 3 envelopes. At this point, your score will be completely unaffected and you're going to be paying several hundred dollars for almost nothing.
Why is Level 1 important? Everything on your credit report MUST be 100% accurate and 100% verifiable. Since addresses and old names cannot easily be verified, they tend to come off very quickly. Once they are off and you are going after accounts, the information on the bad accounts is more likely to be linked to those old names and/or addresses. Once they try to verify that information against personal details that are no longer on your credit report, it is no longer 100% accurate and must come off your credit report. Neat, huh?
This is where the magic happens. You won't need a utility bill or bank statement for this or any other levels. After you get a reply from the bureaus about your Level 1dispute, you will see that you should only have 1 variation of your name, 1 address, and 1 employer. The Level 2 letter asks for the bureaus to verify the accounts listed. (You'll list your negative accounts in the letter) Level 2 is pretty standard too as you are attacking a broad list to see if you get any luck. Once you get results letters back, you can either retry Level 2 or move on to Level 3. If you have more than like 3-5 accounts you are going after, break up Level 2 into a few separate letters.
Level 3 is where you attack public records (bankruptcy, tax lien, civil judgement) and inquiries. Inquiries can be attacked at any time, but it's best to wait until Level 3. This is typically the last level that you'll have to go through. If you don't like your results from Level 2 or 3, there is a Level 4, but it's mostly specialty things or the point where you go after the actual creditor or collection agency.
Done It, Now What?
Now that you have gone through the credit repair process, there are typically a few questions. What if something removed shows back up? Well, if that happens, there is a letter for that which states that you know it is against the law for this to re-report and you expect to either have it removed again or to have damages paid to you. So once something comes off, it's supposed to stay off. The only exception is if a collection account is removed and then sold to another collection agency. At that point, you have to perform "credit repair" again for that account. A Level 2 letter will take care of that.
Yes, letters. Basically they will need a few things to be acceptable. They will need to cite the laws pertaining to credit reporting. They will need your personal info and they will need your request for which accounts you want removed. You can also buy the templates from me and I will be happy to email you a Word Document so you can basically just fill in the blanks. The link for that is coming up with the rest of the links.
If you would like to buy the letters, I have priced them well below most credit repair or credit restoration company's price for you to Do It Yourself.
You will also need a copy of your credit report. It's not a bad idea to have credit monitoring, but if you just want to get it once for free, try out one of these two links. Both will give you a full 3-Bureau credit report with score. They also have trials for Free and $1 respectively. Cancel after you print your report and you've got it. Pulling your own credit report WILL NOT AFFECT YOUR SCORE. So pull it as much as you want. It only affects you if someone else pulls your credit report.
I will leave comments enabled on this to help give some advice for any questions you may have or if there is anything unclear that I need to clarify or add to this guide. Thanks and don't forget to tell a friend. If this has been helpful, please consider using the DONATE button on the right hand side of the page. Or, though I can't ask you to click any ads, if you happen to see any ads that might interest you, feel free to click on them and check em out. It all helps.