No, a credit repair company cannot hurt your credit. A credit repair company's job is to assist you in navigating the bureaucracy that operates behind the scenes of the financial and credit reporting industry.
Credit repair companies will work on your behalf to ensure that only accurate items appear on your credit report; they’ll also provide assistance in recommending ways to boost your credit score and help you find a good credit counselor.
However, in order for this to be true, you must be working with a legitimate credit repair agency. There are legitimate fast credit repair services, but there are many unscrupulous companies out there who prey on people who are less financially savvy. These sorts of people can absolutely negatively impact you by having you sign up for predatory loans and make other damaging financial decisions.
Long story short, everyone has a credit score of somewhere between 350 to 850. According to every financial institution in America, this score plays a huge factor in whether or not your loan, credit card, or line of credit is approved.
There are three credit reporting agencies—Experian, Equifax, and TransUnion. Each company maintains records regarding any past loans or credit cards you may have had; they will also have records of any unpaid debts that have been sent to collection agencies.
Helping your credit score is rather simple—make your payments on time every month as agreed and try to never max out your credit cards. Maxing out credit cards shows poor financial management and is a red flag to financial institutions. Responsible use of credit cards and timely payments on your car loan are excellent ways to boost your credit score. Account history also helps your score–if you’ve had a credit card with a bank for more than ten years and you’ve never missed a payment, financial institutions are more likely to trust you with lower interest rates and higher loan amounts.
Sadly, hurting your credit is much easier than maintaining a good score. A single payment that's more than thirty days late on an actively open loan or credit card can absolutely tank your credit score. Even if you manage to get caught up on your payments, it can take months or years to erase that single black mark.
Another way to hurt your credit is by having it littered with inaccurate information. Remember that car loan you cosigned for your brother that was paid off years ago when he sold the car? Well, according to one or more credit bureaus, that account is still open with your name attached to it. Worse still, it shows that the final payment was late.
This example shows an area in which credit repair specialists really shine–they can dig through documentation and file the relevant paperwork with reporting agencies. They can also contact debt collectors and issue cease and desist letters on your behalf if an account is erroneously in collections. After the incorrect information has been removed from your credit report, your credit score should begin to rise.
No legitimate credit repair specialist would ever hurt your credit, but beware of companies making outlandish claims. Anyone who says they can build a brand new credit profile for you or promises to remove legitimate negative accounts is lying and are most likely attempting to gain access to your identity or offer you predatory loans that could leave you in debt for years.
As long as you do your homework on the company you choose to work with, reputable credit repair specialists, like those at The Phenix Group, are there to help.
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