Credit repair is the process of improving one’s credit score to reflect positive financial attributes. Credit reports are compiled by each of the three major credit bureaus and are used by lenders and other entities in order to determine whether a consumer is qualified for loans or credit, or has a high risk for fraud. Credit repair differs from other forms of financial planning in that, unlike investments, there is often no increase in wealth produced. Here are some things that you should know about credit rebuild program.
Credit repair is not illegal
If an individual provides credit repair services without a license, then they are practicing illegally, however there has been no evidence that these individuals offer credit repair services. Individuals can offer their own methods of credit repair in order to improve their own credit, although these methods have not been proven by the government or any financial institution.
Credit Reports and Scores
There are three major credit bureaus. All three of these companies file reports to the major credit bureaus. Experian, known for their name, collects the information and keeps it on file; TransUnion, who is a specialized company within Experian, buys the information from Experian and then purchases it from other agencies; Equifax is simply Equifax. The reports are used by lenders to determine whether an individual is qualified for credit or not.
Credit Repair Services
Credit repair services are companies, who usually charge a monthly fee, that claim to review a person’s credit report and then provide the information to the credit bureau in order to improve credit. These companies do not actually contact the credit bureaus, however they do issue letters that may be sent with a consumer’s request. The companies will claim that the consumer has been denied loan due to past mistakes, but they will then offer services for a fee which is supposed to delete negative information from their credit report.
It is fully legal to attempt to manage ones credit score by working with the credit bureaus directly. In fact, sometimes you can contact the credit bureaus and have negative information erased from your report! If you have made a mistake in your past in regards to your credit and find that it is hurting you financially, you can contact any of the three major agencies directly and discuss what has happened. If you work with them closely, then they may be able to reverse some of those mistakes on record.