Facts About Credit Repair

Having your credit report examined is about as much fun as having a root canal—every single detail of every financial account you’ve had in the last ten or fifteen years is likely to be there. Many people who apply for loans are turned down due to a poor credit history, which includes things like missed payments or accounts in collections. Some may not be aware that the reason they have a low credit score is that there are inaccuracies on their report.

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With interest rates rising every month, many Americans are rushing to get approved for home and auto loans before they become even more expensive. Anyone who has gone through the process of obtaining a loan can tell you that the first step in the process is getting your credit report examined to determine your ability to repay the loan. 

Having your credit report examined is about as much fun as having a root canal—every single detail of every financial account you’ve had in the last ten or fifteen years is likely to be there. Many people who apply for loans are turned down due to a poor credit history, which includes things like missed payments or accounts in collections. Some may not be aware that the reason they have a low credit score is that there are inaccuracies on their report.

These inaccuracies can be devastating, but fortunately for those looking for credit repair companies in Houston or elsewhere, credit repair companies like The Phenix Group can help. Today, let’s take a look at what a credit report and credit score are, and discuss how a credit repair company can help improve your credit. 

What Is a Credit Report and Score?

The keys to your credit report are held by credit reporting agencies—Experian, Equifax, and TransUnion. Each of these agencies maintains a list of your open and closed credit accounts as well as the payment history of those accounts. Based on this and other factors, the credit reporting agency will assign you an overall score between 300 and 850. Most lending institutions are looking for credit scores above 600 or 650 to grant a loan to a borrower; anything below this is typically subprime territory and interest rates will rise sharply. 

My Payment History Is Perfect—Why Is My Score Low?

If you believe you have a strong payment history, but your credit score is low, there could be inaccuracies in your credit report. Perhaps someone with the same or similar name opened an account and it was wrongly listed on your credit report. Maybe someone provided a social security number to a bank and got one number wrong that happens to match your social security number. There are a million reasons for inaccuracy on a credit report, and this inaccuracy may exist with only one agency or its effects could be multiplied if it’s reported by all three. 

What Can I Do About It, and How Can Credit Repair Help?

Dealing with these inaccuracies is simple in principle but lengthy in reality. You have to file dispute paperwork for each inaccuracy, and you’ll be asked for proof of accounts and other information. You can expect to spend hours on hold with credit reporting agencies and wait weeks while snail mail letters are sent to the necessary parties.

It’s often much easier for individuals to hire a credit repair company to help them through the process. A credit repair company will work with you to examine your credit report from each agency. If inaccuracies are found, the credit repair company will assist in filing disputes on your behalf to get the inaccurate information removed. The process typically takes a few weeks from start to finish but can take longer for complicated cases, and during that time, you’ll have someone in your corner doing the heavy lifting.

What Red Flags Should I Look For?

While credit repair is a legitimate service that can help improve your credit, there are many unscrupulous companies and individuals who are seeking to prey on people who may not be financially savvy. Here are some red flags to be on the lookout for when choosing a credit repair company to work with: 

  • Companies promising to remove accurate negative items on your credit report

  • Promises to build you an entirely new credit profile or offers of credit sweep services

  • Telling you that no matter how bad your credit may be, they can get you approved for a loan—this typically involves pushing you to sign up for predatory loans

  • Companies that aren’t registered or licensed where they are based—when it comes to Texas credit repair laws, you should always do your homework

  • Companies that guarantee they can repair your credit in twenty-four hours or less

What Is the Cost of Credit Repair?

The cost for credit repair varies based on the number of inaccuracies and the overall complexity of the situation. However, the cost is often reasonable when you consider that getting just a 1% lower interest rate on a $200,000 thirty-year mortgage will save you $60,000 over the life of the loan.

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