Key Points to Look For When Fixing Your Credit

In the current status of the economy, having a good credit score is more critical than ever. Now that lending practices have tightened and the cost of living has increased, it is very important to have a credit score that will allow you to not only get approved for credit, but lower interest rates as well. If you have bad or mediocre credit, you need to get your credit fixed. But first, a quick disclaimer: Throughout this article, “fixing credit” means the removal of inaccurate, outdated, erroneous information from your credit reports. The Federal Trade Commission (FTC) regulates disputes against accurate credit items, and nothing legally can be done to remove accurate information. However, even if an account is yours, the credit bureaus may be reporting the information inaccurately. Balances, dates, and other pertinent information must be reported accurately and it is your right to correct this information if it is wrong. The Fair Credit Reporting Act (FCRA) states that the burden of proof lies with the credit bureaus, which means you can make them prove it is reporting accurately.

What’s in it for Me?

If you have a “not-so-bad” credit score, there are many reasons to fix your credit. Although you may be able to get approved for credit cards, auto loans, and, if you’re lucky, a home loan, the interest rates could be much higher. Raising your credit score by just 50 points could save you thousands of dollars in interest over the lifetime of your loan. But don’t take my word for it. Here’s a Loan Savings calculator from myFICO.com; see for yourself. Having a better credit score can even lower insurance premiums.

If you have bad credit, you know why you need to fix your credit. Having bad credit will keep you from getting approved for loans, insurance, credit cards, and can even keep you from getting a job or renting an apartment. The ability to have available lines of credit can provide the freedom to live life without worrying about future financial emergencies.

Who Can I Trust?

First and foremost, you can trust the FTC. The FTC is constantly on the lookout for companies that scam clients into paying them money, or even those who have good intentions but don’t follow the regulations that govern them. These days, credit repair companies seem to have a bulls-eye painted on them. For those of you who don’t have the time or desire to repair your credit on your own and would like some help in cleaning up your credit, just keep away from companies who state the following:

· “We’ll remove the negative information on your credit reports.”

- NO ONE can remove negative information if everything about it is reporting accurately.

· “We’ll guarantee to increase your scores 50-100 points!”

- There are too many factors that go into determining a credit score. No legitimate company can guarantee a score increase.

· “It’s less effective to dispute accounts on your own.”

- Credit repair companies do pretty much the same thing you can do on your own. The only possible difference is they know the credit laws and using the most effective way to dispute inaccurate credit accounts.

· “It will take (more than 6-months) to fix your credit.”

- According to the Credit Repair Organizations Act (CROA), the Act that regulates credit repair companies, no contract for credit repair can last longer than 6 months. The only companies that can “get around” this are law firms. But don’t be fooled; just because they are lawyers doesn’t make what they are doing any more effective than anyone else. It just lets them charge you for a longer amount of time.

So be wary of a company offering empty promises. If you need a company to help you fix your credit, it just comes down to comparing the price with the services you receive. Just like a car wash; you can wash your own car with some water and soap, or you can go down the street to the car wash and pay someone to do it for you. Your car still ends up clean, but you didn’t have to spend as much time or frustration getting it done yourself.