Sunday, October 26, 2014

Should You Use a Credit Repair Counseling Agency


Over one million people file for personal bankruptcy every year. Consumer debt is a huge problem in America today. As a result, many people don't know how they got in debt and don't know where to turn for help. Many people go to credit counseling agencies for assistance.

A credit counseling agency is defined as a company that advises you on managing your money and debt and helps you develop a budget as well as offers free workshops. Some credit agencies or credit repair companies may advise you on managing your money, restore your debt and may develop a budget (spending plan) for you.

When choosing any agency to assist with repairing your credit ask what services are provided based on what your needs are. If you are only concerned with restoring your credit then search for those types of companies. If you are looking for a full service company then look for credit counseling agencies or credit repair service companies.

However, I would use caution when hiring a credit counseling agency or credit repair service. Here are some red flags when considering working with a credit repair counseling agency or a credit repair company:

1. If a company provides guarantees that they can increase your credit score by a certain amount of points don't use them. They are no guarantees because information can be removed from your credit report and your credit score will increase but it depends on your credit score, the type of credit that was delinquent, your debt-to-income ratio and many other factors.

2. Check out the companies' website and check to see how long the company has been in business.

3. Check to see what fees are being charged. If you have to pay a registration or initial fee and then a monthly fee of X dollars that defeats the whole purpose of getting out of debt. You should either be charged a flat fee or monthly fee.

4. If you are already working with a credit repair counseling agency or credit repair company ask to see sample letters that will be sent to your creditors. If a company refuses to show you (which most probably will) then you have no idea what was stated in the letter. I give all of my clients companies of the letters I write to repair their credit.

5. Don't do business with a company that says they will use rapid credit scoring to repair your credit. This method jams the credit reporting agency system by sending many letters about the same issue for inaccurate and accurate information. The system gets confused and removes the items mentioned in the letter from the person's credit report. However, the credit reporting agencies do audits of their systems and eventually the items will be put back on your credit report.

6. Ask the company what is the process they use to restore your credit, if the company does not tell you then don't use them.


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