In these tough economic times, many of us are unfortunately having trouble paying our bills. But just missing a payment or more is not the only consequence of struggling with bills — when you don’t pay your bills, the company that lent you money reports that to the credit reporting bureaus. Once a bad mark or several bad marks are reported, your credit profile and credit score will reflect this to any company that does a credit inquiry on you in the future. In fact, some companies that have already lent you money, like credit card companies, will also be alerted to these bad marks, even if you did pay that company’s bill. These bad marks can carry big problems, so you certainly do not want them on your profile.
We’ve all seen commercials for credit repair services on the Internet and on TV. Just Google “credit repair” and there will be a plethora of advertisements that purport to help. But are those services actually reliable and trustworthy, and can they really help you?
You need to understand that no credit repair service can instantly fix, remove, or lessen the impact of negative credit remarks on your profile. So if you default on your credit cards or other loans, it will impact your score and there is no quick way to mend it. With this in mind, you can safely assume that anyone who promises a speedy credit repair job is misleading you.
Luckily, time can and will heal all bad credit if you do the hard work to reduce your debt, pay your bills on time, and resolve any outstanding credit deficiencies. One thing to keep in mind is that depending on your state and federal laws, debts that are over seven years old (and maybe less) that were defaulted upon may not be your responsibility any more, meaning you may not be legally liable for them any longer. But there are plenty of companies that are scam artists who will get lists of old debts and call people to falsely tell them that they still owe the money and have to pay it. Read up on your state's laws and determine if you can let go of any old defaulted debts.
In addition, if you do actually owe money on old bills (as you may in some states), it may hurt your credit score by making payments on those older bills because they may have been effectively wiped off your credit profile already. This means if you make a new payment on them, they’re effectively live debts again, so learn the laws of your state and be careful!
Real credit repair services that can help are usually non-profit, local, government-recommended credit counseling agencies. They help you make a budget based on your income and try to set you going in the right direction to pay your bills on time and pay down your debts. They may also try to negotiate with your lenders/credit card companies to reduce your balances. Remember, these organizations should never ask for money up front from you, and you should never pay money up front to any credit repair organization. Check with your local government agencies for assistance on finding a reputable group to work with. For example, here is what San Diego’s website says on credit repair.
There are also for-profit entities that promise to “help” people repair their credit. As a general rule, you should avoid any that promise a quick resolution of your credit issues. You should also avoid any that ask for a substantial amount of money up front to get you started back to creditworthiness. But this doesn't mean that all for-profits are not reliable and credible. For-profit entities could be well-intentioned groups that are really helping people, but it’s tough to ascertain the ones helping you versus the ones helping themselves. Make sure to get several references and/or recommendations from people they served who were satisfied with the results. If you don’t, you may just be paying someone who is not going to do anything to help you. And good luck getting your money back from those types of organizations!
Overall, the pool of credit repair service companies has some good organizations, but many, and especially the ones that can afford to advertise heavily, may be less than reputable and instead out to prey on people who are already in financial trouble. Start with a local government agency’s recommendation for a good group to assist you. And on your quest to help repair your credit, you need to realize that there is no quick fix for past bad marks. However, today is a great time to start working to help yourself and your future back to a healthy credit profile.