Credit Restoration- A Detailed Guide for 2023
If you feel like your credit history has been tampered with or received false information over the years by credit bureaus, you can legally raise a dispute against them. The correction process can be done individually or by hiring a legal firm.
When it comes to lending a loan or applying for credit cards, the first thing banks, lenders, or credit unions look for is the credit score based on the credit report provided by the three credit bureaus (Experian, TransUnion, and Equifax). Though they are guaranteed and accepted as trusted bureaus, there is still a chance of producing an error in one’s credit report. If that’s the case, Where would you go to? Or What should be done to set things right on your credit report?
In this article, let us discuss the basics of Credit Restoration and the practical applicability of the process.
What is Credit Restoration?
Credit Restoration is legally raising disputes against all the major credit reporting agencies or credit bureaus for incorrect information on a credit report through a credit restoration company or individual approach.
Though there are several advantages of the credit reporting act, let’s focus on the details of credit restoration. According to the Fair Credit reporting act (FCRA) 1970, every consumer
- has the right to know the information provided by the credit agencies on the credit reports
- right to raise a dispute in case of incorrect or outdated information.
Need For Credit Restoration
When starting a business, purchasing a necessary product, or for a medical emergency, we first consider taking a loan or applying for a credit card. Without a good credit score, it is hard to qualify for a loan from most credit lending companies.
A piece of false or incorrect information may be any one of the following:
- Your name has been misspelt, resulting in unlisted spending and payment history.
- You have repaid your monthly payments on time, but the transaction details are not reflected in your credit report.
- You would have cleared off a debt in the past, but the particular lender, bank, or credit union has failed to update the information on your credit report.
Credit restoration companies help improve your credit score by analyzing your credit report for false information like the ones mentioned above to boost your chances of loan approval successfully.
How Does Credit Restoration Work?
To start off, when you hire a credit restoration company, they will request your credit report to check whether the information provided is consistent with the expenses based on your credit history. In case of any discrepancies, the company will raise a dispute mentioning the list of incorrect information to the major consumer credit bureaus.
You can carry out these tasks independently if you have kept a separate copy of bills and payments to cross-check with the agencies’ reports. Remember that when you raise a dispute against these credit bureaus, the chances of making errors on their end are very low, and you might not get the desired result from the effort made.
Credit Restoration Vs. Credit Repair
The term Credit repair and credit restoration refer to the same process, i.e, to fix your bad credit score by raising disputes against the bureaus for false or incorrect information.
Most credit repair companies work for the benefit of consumers to help them fix their credit reports. In contrast, other credit repair companies take advantage of their customers by taking money upfront before providing the service.
A legitimate credit repair agency
- offers financial advice on ways to handle their credit effectively,
- monitor your credit report for discrepancies by gathering accurate information,
- raise legal disputes against the bureaus,
- and fix your overall credit score at the end of the credit repair process.
This method only works when the information provided by the credit bureaus is genuinely found to be false. On finding the information (late payments, multiple credit card applications, etc) on your credit report to be true, there is no way to clear up your credit history.
The proper way to deal with poor credit scores is to clearly understand how to effectively manage debts and your credit limits; failing to which will lead to a bad reflection on your credit report.
For clarity on credit repair companies, refer to our article on how a credit repair company works. Additionally, to educate yourself on credit management, you can hire a credit counseling agency or a credit counselor to manage your credit limits based on a systemic and practical approach.
Steps Involved in Credit Restoration
Don’t wait for the perfect time if you want to fix your credit score using a credit repair company. It is essential to know the duration and steps involved in the process.
Step 1- When you present your case to a credit repair company, they start the process with your current credit score and a detailed analysis of your credit report with the credit file sent by three major credit bureaus.
Get your annual credit report to carry out this process on your own. The initial step takes time as the data are evaluated and verified with the actual payment history. Once you have identified the errors, file a dispute through any one of the credit reporting agencies, for example- Equifax.
Step 2- Usually, it takes 30 working days for the bureau to respond to your request with the results of your credit report. Check the website’s status if it has taken more than 30 days since you raised a dispute. In case of genuine errors on your credit report, no need to worry as they ensure to update it.
If the response is non-affirmative, you can only boost your credit score through credit repair companies that offer top credit repair services and a debt management plan to increase your credit score.
What Not to do With Credit Repair Companies
Illegitimate credit repair companies charge money upfront and force you to take all the steps without doing the work. At the same time, a legitimate credit repair company takes the case to the bureaus and constantly follows up with them.
Consumers often fall for credit repair scams when companies advertise attractive offers, say a money-back guarantee for their credit repair service. Finding errors in your credit report, they might conclude that the information is accurate or produce a false statement of the original credit report. Therefore there’s no legal way to clear up your credit history through these credit repair scams.
According to the Credit repair organizations act, these types of credit repair agencies are prohibited from misusing information or providing untrue statements on the annual reports of consumers and barred from requiring advance payments for their services.
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Frequently Asked Questions
What can a Credit restoration company offer?
A credit repair company helps you clear up your credit report for any false, incorrect, or incomplete information provided by major credit bureaus. Along with their work on credit reports and filing legal disputes, they provide credit repair services to boost your credit scores.
Is it worth paying for credit repair companies?
You could make the most of the best credit repair company if you have a bad credit report due to false or incorrect information provided by major bureaus. Alternatively, you can use their service to fix and boost credit scores if you handle a bad credit report.
This article gave you the structure behind credit restoration, how to avail of the best credit repair service, and precautions against credit repair scams. It is essential to perform a credit score analysis on your own annually. If you genuinely find it hard to do the work by yourself, getting assistance from reputable credit repair companies will do the job.
If you are someone looking for a credit repair company to educate you on credit reports and scores, TheCreditPros has been a credit repair services company for more than a decade, producing positive results for customers. Get a free consultation and start repairing your credit score with the additional help of an AI-driven personal credit management system.