The Importance of Credit Repair
A Credit Article Contributed by Augusta Wilson
What is Credit Repair?
'Credit repair' is a term which describes the process in which consumers attempt to reinstate their credit-worthiness. The process usually entails requesting a credit report and then addressing any apparent issues, such errors, omissions, or misinformation. The consumer can then formally dispute these errors or issues, utilizing the various laws and regulations which are designed to ensure that this process is executed fairly.
Consumers are legally entitled to a copy of their credit report, if they have been denied a credit card or loan. If the information provided on the report is inaccurate, it needs to be repaired via an investigation. It is important to remember that the same credit repair processes which are employed by agencies -- and which can cost up to $2100 -- can be utilized by the consumer, for free.
The Importance of Credit Repair
A consumer's credit history can greatly influence their future purchasing power. A good rating, or score, can insure a low interest rate on credit card balances, car or home loans. A poor rating, therefore, may allow a finance company to charge a consumer exorbitant interest rates on balances on credit cards or car loans -- sometimes as high as twenty-nine percent. Considering the stakes involved, it is imperative for consumers to understand the importance of repairing their bad or low credit ratings.
Why are There So Many Credit Repair Agencies?
With a growing number of Americans thousands of dollars in debt, credit repair has become a national catch-phrase. On an almost daily basis, consumers are bombarded with various companies tempting prospective clients with the promise of a perfect credit report. These offers come in a variety of ways: as advertisements on the television or radio, or via tele-marketers offering easy credit repair services.
How Can I Repair My Credit?
The first step in credit repair is to recognize what legitimate options are available, and this means recognizing what the scams are. Again, as a poor credit history can make it difficult to obtain additional lines of credit or possibly create difficulty when renting or leasing a home, many seek a quick-fix approach. There are many unethical programs designed to target consumers with less-than-perfect credit.
One such scam simply involves an individual or company that has no intention of providing the services advertised. Another common scam involving credit repair is the alleged 'new credit,' whereby a company promises to help clients develop a new credit identity. Although such services are advertised as 'legal,' the actual process is not.
The client is shown how to apply for an Employee Identification Number, which is then simply substituted for the client's social security on future credit or loan applications.
Is There a Safe, Legitimate Way to Repair Credit?
Credit repair can be achieved through financial discipline and hard work. Whilst it may be tempting to seek an easy way out of a history of poor credit, utilizing an easy way out may well lead to further financial difficulties down the road.
