Can a Credit Repair Company Erase a Poor Credit History?

Bad credit is detrimental to your financial standing in many ways.A low credit rating can mean getting credit cards and other credit lines at exorbitant interest rates and low limits.

If your rating is really low, your credit applications may not be approved at all.Further, landlords may decline your rental application or ask for higher security deposits.

Simply put, the negative effects of bad credit are so far-reaching that many people are willing to do anything to get a better score.

To this end, you’ll find services offering to delete negative items from your reports.

So, do such fixes work? If not, how do you go about fixing poor credit?

Let’s find out:

Can Poor Credit History Be Erased?

Yes and No.If the right steps are taken to remove mistakes in your report, then bad history can be erased, allowing your rating to get a boost.

On the other hand, a service that promises to erase correct, but negative, information on your report is a scam.Companies running such frauds can even go further in promising you a completely new and blemish-free identity.

Are Credit Repair Companies Legal?

Credit repair is a legal service that is guided by the Credit Repair Organizations Act (CROA).Under the act, companies work within a framework that protects consumers from unscrupulous practices.

This consumer protection act has been in effect since 1996 and bans:

Changing a client’s identity to hide them from lenders and credit reporting bureaus.
Assuring consumers that they can erase items from a credit report.
Getting paid for incomplete repair services.
Advising you to make deceitful claims to furnishers of credit information or agencies.

Credit repair companies are also obligated to notify consumers that they can directly raise issues with credit reporting agencies.

Furthermore, the bureaus are required to make certain that their reports are without error and investigate any issues about the reports they generate.

It’s also worth noting that it’s within your right to sue any company that contravenes the CROA.

How Do Credit Repair Firms Remove Bad History?

Companies in this field act on your behalf to access your financial reports and dispute errors.A successful service ensures that the damaging information is excised from your credit report.The service involves:

Checking Credit Reports

The company requests your reports from Experian, Equifax, and TransUnion.With the three reports, credit repairers can have a complete picture of your finances, since creditors are not required to subscribe to all credit agencies.

Reviewing and Disputing Errors

Credit repair professionals go through the different entries in your reports, confirming details as contained in supporting documents from the primary sources.

For example, to find out if a credit limit is accurate, the entry is checked against a statement from the specific credit line issuer.Such errors are marked and the right documents are prepared to initiate a dispute.

Disputes are raised with both credit bureaus and the originators of the misleading information.

Errors can be anything from a misspelled name to duplication of debt.

If the disputes have merit, the bureaus are required to erase the affected entries.This is usually effected within a month or so after the process is initiated via mail or online.

What Can’t Be Erased from a Credit Report?

No matter how expensive a credit repair service is, some entries can’t be removed from a credit report.In a nutshell, all correct information stays on your report, irrespective of how damaging it is to your credit rating.

At the same time, bureaus are required to retain some vital entries in your reports, long after you have cleared the debt.

Such entries include:

Payments for the last 24 months, whether they were timely or not.
Bankruptcies on your report can remain for up to 10 years, even after your status changes before the duration lapses
Applications for loans, credit cards, business loans, and other forms of credit.The entries are known as hard inquiries and stay on your credit report for 2 years.

The Takeaway

One approach to improving your credit standing is finding and disputing wrong information in your credit report.Common errors include incorrect accounts, inaccurate personal details, and data management errors.

With your authorization, credit repair services can help rectify mistakes and erase errors that are lowering your credit rating.However, such businesses are governed by laws that prescribe limits to what can or can’t be erased from a credit report.

Ultimately though, you need to build your credit through timely payment of balances and not maxing out your credit limits.

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Frequently Asked Questions

Certainly. Unlike personal loans, you won't face any penalties for settling your balance ahead of schedule. However, it's crucial to keep in mind that if your credit card comes with a 0% introductory offer, it's essential to clear your balance completely before the 0% promotion expires and interest charges apply.

However, you can include additional cardholders, each with their own card. While sharing the single credit limit, the primary cardholder remains responsible for settling the debt.

Potentially, yes. Credit card APRs are typically variable, allowing lenders to change rates, impacting your monthly payments. Additionally, be mindful that introductory 0% offers can lead to higher interest rates once they expire. So, it's wise to clear your balance before that happens, if feasible.

Indeed, credit builder cards exist for those with less-than-ideal credit scores. These cards offer lower credit limits (typically £150 to £1,200) and higher interest rates. Responsible use, including full and on-time payments, can gradually boost your creditworthiness, potentially opening doors to better credit card offers down the line.