How Does Credit Repair Really Work Nowadays?

Can bad credit be repaired? This is the first question that comes to mind when you hear of the term ‘credit repair companies’. This is the reason why many people are asking the question, ‘how does credit repair really work?’ There are several credit repair companies online which promise that for a fee, they can remove the negative information in your credit report.

So, what do these companies actually do? Simply put, credit repair companies can only do some few things concerning your credit report. They cannot illegally remove any information which is supposed to be on the credit report. If you default to repaying a loan, and the lender reports you to the Credit Reference Bureaus (CRBs) that information will remain there for so long as that debt remains unpaid.

The following is a brief explanation of what the credit repair companies can do, and what they cannot do.

Credit repair companies can –

A credit repair company will review your credit report to establish whether there could be an erroneous report appearing in it. If they find that there is inaccurate information appearing in the report, they will contact the credit reporting agencies and then file a dispute to that information. This means that credit repair companies may have nothing much to do if the information appearing on the credit report is factual and correct.

Credit repair companies cannot –

The credit repair companies are supposed to operate within the law, and on that note, they cannot do the following –

  • They cannot advise on how to falsify claims with the intention of altering the identity. Changing identity with the intention of avoiding debt or credit liability amounts to credit fraud which is a criminal offense.
  • They cannot remove or promise to remove accurate information appearing on the credit report.

Your rights as the customer:

Some people have described credit repair companies as a scam. This is due to a misunderstanding of the role of credit repairs companies regarding what they can do, and what they cannot do for you as explained above.

In addition to this, the law requires that –

The credit repair company should provide you with a written contract which clearly specifies the nature and extent of services it will provide.

It should allow you, the customer not less than three days within which you can withdraw from that contract.

Also important to note is that you are only entitled to pay for credit repair services after the credit repair company has fulfilled the contract terms.

So, do they help?

Credit repair companies are helpful especially if there is inaccurate information on your credit report. However, they cannot do much of all the information in the report is accurate. What you need to note is that the long-term solution to poor credit rating is paying owing debts and taking other steps to improve credit, such as paying bills on time.