Credit Repair: Do it Yourself or Hire a Pro?

If your credit score is the rough equivalent of room temperature, it might be time to undertake some credit repair measures. This means one of two choices: hire a professional credit repair firm or handle it yourself.

The credit repair industry has its fair share of snake-oil salesmen. The plain truth is that credit repair firms can’t accomplish anything for you that you can’t do on your own—with proper guidance.

Separating Fact from Fiction

Promises of quick fixes and promises to eliminate all negative information on your credit reports are almost certainly signs of a scam in progress.

Credit repair companies are subject to the Credit Repair Organizations Act, a federal law enacted to protect consumers from unethical and deceptive practices. If you choose to use the services of a credit repair firm, make sure of the following:

1.) You receive a copy of the Consumer Credit File Rights Under State and Federal Law
2.) You are provided the opportunity to review any contract for services before signing it
3.) Your contract contains the following information

  • The total cost for the service
  • The nature of the services being performed
  • The date by which the services will be performed
  • The complete name and business address of the business
  • Notice that you have the right to cancel the agreement/contract within 3 days

4.) You are not asked for payment until the services are performed
5.) You are not asked to create nor does the company offer to create a new identity on your behalf
6.) You are not asked to waive your rights under the Credit Repair Organizations Act

A number of myths surround the concept of credit repair. Some people think the practice is illegal … it isn’t. Others believe it doesn’t work … it does. Many believe you need to hire an attorney to battle the credit reporting agencies … you don’t. A few folks assume that simply paying off your debts fixes your bad credit history … it doesn’t!

What Are the Costs?

Credit repair companies vary widely in terms of fee structures. I know firms that charge a $1500 retainer plus a monthly fee until the work is completed. Others charge flat fees ranging from $600 to just under $1300. Truth told, the industry is poorly regulated, hence the passage of the Credit Repair Organizations Act, which, by the way, does not limit the fees these companies charge. The act only requires that the costs for the service be disclosed.

Do-it-yourselfers pay no fees. However, to say that you can accomplish credit repair for free is very misleading. Frankly, it is a time-consuming process. Letter writing is an integral part of the process and most of these letters need to be sent certified mail, return receipt requested. That’s not cheap and, of course, your time is worth something as well. Nevertheless, I can’t conceive of a scenario in which you would spend anything approaching the average fees charged by credit repair companies.

Established procedures are in place to challenge any errors or omissions that you find in your credit file. While addressing these issues can be somewhat cumbersome, the process is well within the ability of most folks. All that is necessary is clear, concise instructions like those provided in How to Fix Your Credit, authored by our very own Dominique Brown.

Dominique’s no-nonsense book will guide you every step of the way. To be sure, there are other books out there, but, in my view; Dom’s tome is the most comprehensive and straightforward of any on the market today and priced within the grasp of the most modest of budgets.

In any case, invest in a comprehensive credit repair guide. The process is not terribly complex, but you will need to be versed in the protocols. You would look at a Chilton repair manual before changing out your vehicle’s water pump—right?

My Recommendation

In my view, handle it yourself. Not only will going it alone save you money, it prevents your sensitive, personal information from being shared with unknown legions of people working for the credit repair company. The last thing you need is a case of identity theft.

I also favor being in charge of my own destiny. If you do the work, you will know when it was done and you will know that it has been done correctly. How do you put a price on peace of mind?

What about You?

So, are you ready to roll up your sleeves and get started? Have you ever worked with a credit repair company before?

Tags

Leave a Reply

Your email address will not be published.

top

Teach me how to improve my finances, 

so that I can buy a home

and stop wasting my money on rent