Credit is a great tool to be able to use responsibly. However, there are many individuals who fall into trouble when they use credit the wrong way. They either do not know how to use it correctly, or are just up to their neck in debt. This is where established credit repair and debt management services can help you out.
The reason why so many credit troubled individuals do not seek out credit repair services is that they are afraid, or just not too sure of the service. They feel too embarrassed about what they have done, and feel that no one will be able to help them. Or maybe they are just worried about being scammed by a illegitimate company. Since the economic recession began at the end of 2007 the number of mortgage, debt, and credit scams have sky rocketed. More and more firms are being shut down for their unscrupulous ways, so please be very wary when it comes to taking on this kind of service.
The FTC explains warning signs you should look out for:
“If you should decide to respond to an offer to repair your credit, think twice. Don’t do business with any company that:
* wants you to pay for credit repair services before any services are provided
* does not tell you your legal rights and what you can do yourself — for free
* recommends that you not contact a consumer reporting company directly
* suggests that you try to invent a “new” credit report by applying for an Employer Identification Number to use instead of your Social Security number
* advises you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.”
But this does not mean that everyone is a scam. There are many legit companies out there who do a great job repairing their clients credit. So make sure you investigate the company before you choose whether or not you want to take on their service. Also, many professionals suggest to stay away from for-profit companies because they are more than likely a major scam!
While you may have damaged your credit, there is no credit that is completely beyond repair. Still, you are going to need to be committed to being part of the process. If you are not ready to begin the transformation from part time creditor to full time learner, then you are not going to be able to make a difference. You will have to play your part in re-establishing your score.
There are dozens of different services out there for you to choose from, many you will find right here online. You should make sure to ask for customer reviews, and whether or not they charge a fee for their service. There are many services that are offered free, while others are for-profit companies. Typically, this is percentage of your credit that they manage, but some may also offer a flat fee plan. But, remember hiring a for-profit company is very risky when it comes to this business.
There are also various laws these companies have to abide by. Here the FTC outlines these laws in detail:
“By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific consumer protections. For example, a credit repair company cannot:
* make false claims about their services
* charge you until they have completed the promised services
* perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Your contract must specify:
* the total cost of the services
* a detailed description of the services to be performed
* how long it will take to achieve the results
* any “guarantees” they offer
* the company’s name and business address”
Another reason you should look at a credit repair and debt management service is for convenience. While you could sit down and plan out a budget by yourself, you might not know how to do so. Sure, you know that you should only be spending what comes into your home each and every month, but it might be hard for some to budget themselves enough to do so. By using a credit repair and debt management service, you simply take in your pay stubs and a list of your expenses, and walk out with a new monthly budget. You may also be trained in how to re-pay your debt. In fact, you may even be able to stop or lower the interest you pay on your outstanding credit card or other credit balances.
Visit MoneyManagement to find a credit counseling agency near you were you can meet face to face with a credit counselor.