How Credit Repair Works

 Applying for something like a mortgage or an auto loan is difficult if you have bad credit. It’s especially frustrating if you’ve worked on improving your credit, but feel like your score doesn’t reflect all of your hard work.

This is where credit repair companies come in. Credit repair companies help clients review their credit reports and correct or remove inaccurate items to help improve scores.

You may have a lot of questions about credit repair companies and how they work. Our guide below breaks down common questions so you can understand what a credit repair company does and how they can help you improve your credit. You can start from the beginning or jump to a specific question.

 A credit repair company is an organization that helps you understand and repair your credit by analyzing your credit report and disputing inaccuracies with credit bureaus and creditors. Credit repair companies have the experience and knowledge to tackle credit issues that could be difficult to resolve on your own.

This expertise makes the credit repair process easier for customers. Companies know what to look for, understand the process needed to fix inaccuracies, and are informed on what clients are legally entitled to request from both credit bureaus and creditors.

Credit repair companies are different from credit counseling agencies. Credit counseling organizations are normally nonprofit. They advise about debt and finance management, help you get a copy of your credit report, and other services depending on the organization.

  Credit repair companies typically request and review your credit report from the major credit bureaus (TransUnion, Experian and Equifax), create and execute a plan to fix any discrepancies, and recommend other ways to improve your score.

Each company’s methods and steps vary, but we’ll break down what to generally expect from most companies.

Review Your Credit Reports

When reviewing your credit report, companies typically look for credit report errors like:

• Accounts that don’t belong to you
• Duplicate accounts
• Incorrect inquiries
• Inaccurate accounts

These inaccuracies can unfairly take a toll on your credit score. Periodically reviewing your credit report helps you catch these inaccuracies before they affect your score. Credit repair companies know what to look for and can save you the time and effort needed to review each report line by line.

Dispute Discrepancies

Next, credit repair companies initiate credit challenges for all of the errors found on your credit reports. By submitting a dispute, you’re requesting the credit bureau review the accuracy of the information on your credit report. The bureaus are required to either correct or remove it if they’re unable to verify it. Credit repair companies can save you time and ensure you’re doing things right by helping you identify and gather the evidence needed. They also help you manage and craft correspondence with the credit bureaus and creditors. 

 This step especially varies between companies. For example, some companies may monitor your credit and identify opportunities to improve your score.

Others may not offer credit monitoring, but instead offer credit counseling to help you create a plan to manage your credit in the future.

Cobra Credit has a top of the line credit repair process which includes the following steps:

• Case intake
• Legal action
• Credit score analysis
• Follow-up and escalation

 The cost to repair credit varies between companies and the level of service you choose.

Payment for credit repair can range from one-time flat rates, charges for each inaccuracy found or monthly payments. However, the Credit Repair Organization Act states that credit repair companies are not allowed to request or receive payment until the promised results are delivered.

Despite how much you pay for credit repair, you may end up saving in the long run after your credit score is improved. A poor credit score results in higher interest rates and fewer available options when shopping around for things like auto or personal loans.

Spending time and money to repair your credit with a credit repair company can potentially save you thousands in the long run, depending on your situation.

At Cobra Credit, our credit repair services are $99.99 per month. Learn more about what kind of help you can receive with our different service levels.

  You can verify a credit repair company by asking the right questions, looking up reviews and understanding what they legally can and cannot do. Doing your research beforehand can save you time, money and unnecessary stress.

Here are some red flags to look out for:

• Demand payment up-front: As we’ve mentioned, this is illegal and you should not pay up-front.
• Sounds too good to be true: Promising to get rid of negative items, even if they’re accurate, is a red flag that the company is illegitimate. Another red flag is if the company claims they can increase your score an exact amount, especially quickly or within a certain time. This is unethical and not plausible to guarantee a specific result.
• Can’t answer questions: If the company dodges specific questions about the services or the price, it may be a sign that the company is illegitimate.
• Hold back or provide misinformation: The company should inform you about the rights you have as a customer, like your right to cancel your contract with them within three business days.
• Ask you to misrepresent information: A legitimate credit repair company will not ask you to misreport or otherwise misrepresent yourself or your information.

 The time it takes to see the results from credit repair varies based on your current score, financial situation and many other factors.

For example, a person with a few simple inaccuracies on their credit report may see their results sooner than someone who has multiple complex inaccuracies that require lots of correspondence. However, results vary greatly.

The credit bureaus are required to correct or remove any inaccuracies reported to them within 30 days under the Fair Credit Reporting Act. However, it still may take longer depending on your situation.

   Yes, you can repair your own credit, but you must make sure you’ve done your research to do it correctly. Legitimate credit repair companies should also inform you of that when you contact them. You can do anything that a credit repair company does. For example, you can contact the credit bureaus directly instead of using a credit repair company’s help.

However, repairing your credit without the help of a credit repair company or financial expert can hurt you in the long run if you haven’t done your homework. There are a lot of things you can easily miss if you don’t have the experience or knowledge that they provide.

 If, for example, you do put in a dispute with the credit bureaus, you may get denied for not providing enough information to prove your case. This can even happen if you’re in the right. 

   Credit repair companies cannot guarantee results, but you can ask for the company’s testimonials and look for reviews to see their success with past clients. This information gives a snapshot of what it’s like to work with them and what type of results they’ve delivered in the past.

Credit repair can vary for everyone. One of the best ways to see if it’s the right solution for you is to start with a consultation. That way, you can ask all of the questions you need and get an idea of what services and pricing fits best with your situation.

If you’re interested in getting started with a credit repair company, you can sign up now for the Platinum Cobra Service or schedule a free consultation to see where you stand and learn how Cobra Credit can help you with cleaning up your credit report.