You don’t need to look for credit help. It’ll find you. Usually in your spam e-mail inbox or junk mail in your home mailbox. The problem is most of the so-called credit help will usually do your credit harm if you’re not careful. There are a number of credit services out there that offer credit rebuilding, rapid rescoring, improved Fico scores, and credit counseling.
They all make big promises and seem like a great idea. Who wouldn’t want to boost their credit score 20 points in 48 hours? But most of the time credit scores are an accurate measure of your borrowing history, and little can be done to change them instantly.
Sure you can improve your credit scores over time with a conscious effort and determination, but quick-fix credit repair solutions aren’t the best way to tackle credit issues.
If you really want to fix bad credit you need to analyze the root of your credit woes. Get your hands on a free credit report.
This is the only legitimate free credit report service provided by the government to consumers. Many other credit companies owned by the three bureaus masquerade as free credit report companies, but they will carry a fee or offer a free introductory period with a money-back guarantee. Look closely and you will see that many big name credit report companies are owned by the three credit bureaus, which also happen to be publicly-traded companies.
I’ll admit it. I used one of the pay services years ago to check out my credit score. I did so assuming I would cancel the service after the 30-day trial period. When I purchased my free credit report my Fico score was somewhere around 660. I didn’t know much about Fico scores at the time so I investigated further.
After a bit of exploration I found a medical collection on my account. I knew this had to be an error since I had never used any medical services in the past. Luckily I was able to use a tool included in my free credit report package to challenge the inquiry. Although the process took over 30 days to reach a resolution, it was eventually removed from my credit report and my score jumped up to 700. Of course I ended up paying for a month of the service for about $29.99, but in hindsight it was worth it.
While this story may make me look like an advocate for the paid credit repair services, it must be taken with a grain of salt. The program was really only useful to me because there was an error on my credit report. Had there been any substantiated derogatory accounts and late payments on my credit report I wouldn’t have been able to simply clear them away with credit tools. Sure I could have challenged them, but probably with little success. All I’d really get out of the service would be the credit report itself along with weekly reports of any changes.
The point of my story is that credit repair programs are only useful if you legitimately find something wrong and need it fixed immediately, or if you plan on paying down debt on some credit lines. If time isn’t an issue, and there aren’t any inaccuracies, it’s really pointless to use credit help programs. You might as well just order the official free credit report and analyze ways to organically raise your credit score. This includes lowering outstanding balances, paying off credit cards, raising credit lines, and avoiding late payments and collections. Also avoid opening any new credit accounts if you want your credit score to keep moving up. New credit always brings your score down a bit in the short-term. All of this takes time, but is the most effective way to fix bad credit. And you’ll learn to manage your credit. For free!
Rapid rescore programs are another scrutinized credit service that I’d like to highlight here. As I mentioned before, if there are legitimate mistakes on your accounts, rapid rescoring can be helpful in quickly updating the three bureaus' information. Rapid rescoring is also useful if you pay off some big chunks of debt and want that to be reflected on your credit report immediately. It does come with a cost though, and I find it hard to believe that these companies can give you a solid estimate of how much your score will move. And if you follow my advice, you shouldn’t put yourself in a position where you need to do last minute credit rescoring. You should obtain a credit report months before you set out to purchase a property to avoid any late surprises.
As far as credit counseling goes, it is something that in my opinion should be avoided at all costs. While it will lower your monthly payments, your credit report may still show the accounts included in your credit counseling program as late if the payment you make is less than the minimum payment. And on top of that, most credit counseling programs don’t allow you to open any new credit accounts for a certain period of time as stated in the credit counseling contract. You definitely won’t be able to get a mortgage, so take extreme caution when going into contract with one of these companies.
Fix bad credit in the following ways:
- Pay off debt
- Raise credit lines
- Resolve accounts in dispute
- Rapid rescore programs if there are errors or if you pay off debt
Avoid the following:
- Closing credit accounts
- Maxing out credit accounts
- Opening new credit accounts before or during mortgage application process
- Credit counseling programs