Sunday, December 14, 2008

Should You Use a Credit Repair Company?

Q: Should someone use a credit repair company to improve their credit score?

A: No one should ever use a credit repair company. The vast majority of them are complete rip-offs. There are no "secrets that the experts don't want you to know." If there is an error on your report, you can correct it yourself, for free, by writing a letter to the three credit reporting agencies (TransUnion, Experian, and Equifax) and sending them the documentation showing that there is an error. It costs nothing. If someone tells you that you can raise your score by protesting everything, they are giving you extremely bad advice. Old collection accounts can become new collection accounts if the collection company starts trying to collect from you again, accounts that were in bankruptcies can be erroneously reported as not being in the bankruptcy, etc. No matter what is on your credit report, if the date of last activity is more than two years old (and it's not an unpaid tax lien or an unpaid judgment), it will not lower your score. As mortgage brokers, we are approached regularly by credit repair companies trying to get us to rip people off by selling them credit repair services. Do not fall for it!

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