Is Credit Sweep Legal?

When anyone is seeking a loan, the first step in the process is getting their credit report. This can be a stressful process even for people who have excellent credit, so what happens if the credit report comes back with a poor credit score?

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Typically, this is the end of the journey before it even begins, as most banks will deny a loan on the grounds of poor credit. 

However, there are ways to repair one's credit. One avenue is hiring a reputable credit repair company, like The Phenix Group, to help clear up your credit report. In today’s article, we’ll examine what credit repair is, how it works, and why you’ll want to hang up on anyone promising to perform a credit sweep.

What Is Credit Repair?

First, we need to understand how the system works. Anytime you obtain a loan or credit card, the bank starts reporting the status of this account to the three credit agencies in America—Equifax, Experian, and TransUnion. These credit reporting agencies examine how many accounts you have, how much you owe vs how much you borrowed, if you’ve missed a payment or had an account closed, as well as a few other factors. Taking all of these details into account, they use a formula to calculate your credit score—a number ranging from 300 to 850.

Whether you’re looking for a credit repair company in Houston, Texas or elsewhere, credit repair is the process of disputing inaccuracies to get them removed from your credit report. For example, a car loan that was paid off three years ago but appears as an active account with missed payments could be tanking your credit score. 

While you can dispute and clear these issues yourself, it's a time-consuming endeavor that often involves a significant amount of paperwork and a lot of time on the phone with banks and credit agencies. Credit repair companies are experts at navigating this process and have the tools and contacts needed to resolve issues as quickly as possible. 

The cost of credit repair can vary based on how many items need to be disputed and the overall complexity of the case, but when you consider that clearing your bad credit history and raising your credit score means lower interest rates, the cost can pay for itself in savings on your loans. If raising your credit score gets you just a 1% lower interest rate on a $300,000 thirty year mortgage, that tiny 1% difference will save you $90,000 over the life of the loan.

What’s Wrong With a Credit Sweep?

Sadly, in the world of credit and loans, there are many companies and individuals that seek to take as much money from you as they can, regardless of the consequences. There are some companies out there that pose as credit repair companies promising things such as wiping your credit clean with credit sweep services or providing you with a new credit profile. These promises are lies. 

A credit sweep is a process by which someone attempts to dispute accurate information. Companies will promise to get something like a foreclosure removed from your credit report—in reality, they will either take your money and do nothing at all, or they may be filing forged police reports stating identity fraud in an attempt to get these accounts removed. In the end, once these false police reports are uncovered, the “credit repair company” is long gone and you’re left answering questions about why your signature is on fraudulent financial documents. 

In Summary

If it sounds too good to be true, it probably is–this is a wise rule to follow when seeking credit repair services. Do your homework and avoid anyone making outlandish claims. With a proper credit repair company like The Phenix Group at your side, you’ll have your credit score rising in no time and lower interest rates saving you money.

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