Do credit repair programs really work?

For many in the real estate industry, credit is the most important thing you can have. For most people, you can’t buy a house without credit. You pay higher interest rates with bad credit. You also pay more for other things like insurance and appliance financing with bad credit. So what do you do if you’ve had some mistakes in your past and need to fix your credit?

Many people turn to professional credit repair programs. If you search for credit repair on the Internet, a million different companies will come up and promise to do everything for you to repair your credit. Many people who are eager to buy a home often spend money on these programs in the hope that their credit will increase enough to take advantage of current interest rates and qualify to buy a home.

In my business I have researched many of these programs and while some of these programs offer legitimate credit repair help, none of them do anything you can’t do for yourself. In fact, information on how to repair your credit is freely available if you search the internet. In my experience, most people feel like it’s too much work or worry they might get it wrong and that’s what drives them to pay a professional.

So if you’re going to pay for a credit repair service, here are some things to consider when making your decision.

First of all, don’t use a company that sells lines of credit. Some companies say they can add you to someone else’s line of credit and that will boost your score almost immediately. While this is true, about 2 years ago the credit bureaus adjusted your credit score and now when they add you to someone else’s credit cards it only has limited effects on your credit so be careful.

Second, a credit repair service is not a licensed service, so look at the details. Credit repair companies are often NOT licensed, so look at their information and ASK THEM what they are going to do. If they can’t clearly explain what they are doing for you, beware.

Finally, before you hire a credit repair agency, look at your own credit report. Look to see how old your credit items are. If they are older than 7 years, you may be able to remove them with just a phone call. Read about it online and do some research yourself before spending that money.

Until next week…

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