When loan applications are turned down, this usually happens due to low credit scores. Across the United States, millions of citizens suffer from the effects of reporting errors. They influence different spheres of life, as scores are used by banks, landlords, insurers, and employers. The mission of these fixers is to eliminate such inaccuracies. But how exactly do they achieve it?
It is a large industry. Dozens of companies may offer similar services in your area, so choosing becomes a challenge. According to the top-rated credit repair services at creditfixed.com, the best providers are well-established businesses with positive BBB ratings and feedback on sites like Consumer Affairs. Let’s look at what their services include.
Stage 1. Collecting Information
You can easily check your report yourself on mobile apps or websites like My FICO. Reports are also free for download once a week until April 20, 2023. If you let a company like Lexington Law fix your credit, the experts will collect the information for you. They will obtain the records from TransUnion, Experian, and Equifax to compare them and spot any questionable entries. As the reporting agencies compile the documents independently, it is crucial to consider the whole picture.
Stage 2. Analysis
Each document must be examined with the utmost care. Any suspected items can be disputed if the provider finds evidence. Generally, the errors range from innocuous misspellings to events that never happened, such as bankruptcies or evictions. Most negative information stays on your reports for seven years, so it is important to delete it as soon as possible. Chapter 7 bankruptcies have a lifetime of a decade!
Sometimes, analysis reveals the suspicious activity that points to identity theft. If fraudsters take out loans in your name, you will see accounts that should not belong to you. Other inaccuracies include the following.
- Outdated information (entries that should have expired but are still being reported).
- Absence of positive events because your name was misspelled.
- Inclusion of someone else’s debts for the same reason.
- Legal events like bankruptcies that have never happened.
- Payments mistakenly marked as late or missed, etc.
Stage 3. Proof
Now, once the culprits are identified, the company will gather evidence to have the derogatories deleted. It will send letters to your financial institution to confirm the amount they reported. Bank statements, emails, and other documents from the bank are collected as proof. Importantly, only the bureau can correct its own records, so the company will build a compelling case.
Stage 4. Disputes
After the evidence has been collected, the team will proceed to the final step. It will draft and send official dispute letters to the bureau or bureaus concerned. As a rule, this formal correspondence is sent by certified mail with a return receipt requested.
After the agency receives a claim, it has 30 days to initiate and finalize an internal investigation. The bureau will liaise with the lender to verify the questionable debts. If they are unsubstantiated, the entries are removed, and your score jumps immediately.
Otherwise, the bureau will reject your dispute or request additional information. Redisputes prolong repair, so professionals do their best to succeed from the first attempt.
What These Repair Companies Cannot Do
The law obliges the bureaus to provide only accurate information. If the derogatories you question are verified, there is no way to remove them from the records. No reputable firm in the repair niche can promise to delete any correct details. However, the company may help you rebuild history through responsible borrowing.
Many repair firms offer educational resources: articles, tutorials, and even budgeting apps. You may also gain access to a special credit line. It will allow you to fix your status through responsible borrowing behavior. Financial literacy is indispensable for a positive history.
If the Score Is Correct
If the score is low but fair, you should look at its components to see the areas of improvement. As payments affect 35% of FICO and 40% of VantageScore, making them on time is absolutely crucial.
The second vital factor is utilization — the proportion between your balances and limits. The less of your available credit is charged — the better for the score. For example, with a total limit of $10,000, your target balance should be $1,000 or less.
Another way to affect the rate is by extending the limits or getting you credit cards. Note that applying for multiple products within a short period of time leaves a hard inquiry that can bring your score down. Ideally, if you need to apply for a card, do it just once. To improve chances of approval, opt for a secured card that requires a deposit.
In our example, if your balance is $3,000, but the total limit grows from $10,000 to $15,000, the utilization will drop from 33% to 20%. If you pay off half of the balance, you can bring it down to the target level — $1,500 across all cards.
Extra Tip: Adding More Information to Your Experian Report
You could also gain a few points via Experian Boost. This free online service allows you to add more information to your report. For example, phone bills, utility payments and even Netflix or HBO subscription can work in your favor. On average, consumers add 12 points to their score.
The Bottom Line
Repair companies can help you remove errors from your Experian, Equifax, and TransUnion reports. This raises the score, which is good for your borrowing, employment, renting, and insurance. However, the repair is not a magic wand. It will only work if the information is erroneous or outdated. On average, repair takes a few months, so check your records in advance before applying for a new loan.
If fixing is not possible, work with your current accounts to improve the status. Consider your balances and limits, and make all payments diligently. Knowledge of the elements that make up the score will help you choose an optimal strategy. Work on multiple fronts at once for the best results.