Having bad credit can cause considerable emotional and financial stress and significantly lower your credit score, which can prevent you from being approved for credit products, such as a credit card, mortgage or even a phone contract.
But while it might feel like you are doomed, a credit repair company can help you regain control of your finances and achieve a brighter financial future.
So, what exactly is a credit repair company and, more importantly, should you use a credit repair company to improve your credit?
In this guide, we’ll explain what a credit repair company is, what a credit repair company does and how to choose the best credit repair company for you, whatever your financial situation.
What is a credit repair company?Simply put, a credit repair company is a third-party organisation that can improve your bad credit by disputing information contained on your credit report and negotiating with credit bureaus and creditors on your behalf in exchange for a fee.
Because of this, they are often thought of as credit score advisors or managers.
It is possible to try and dispute errors on your credit report yourself, but a credit repair company has the knowledge and experience to tackle complex issues that you might find difficult to deal with on your own and can speed up the process and help you fix your finances sooner.
Here’s an example of how we can help.
Total amount owed:
Your monthly repayments
Reduced by 88%
Monthly payments are based on individual financial circumstances
Are credit repair companies and credit counselling agencies the same?It is a common misconception that credit repair companies and credit counselling agencies serve the same purpose and, while they do share some similarities, there are some key differences you should be aware of.
For example, credit repair companies are qualified companies that can help get inaccurate information removed from your credit report while credit counselling agencies are usually non-profit organizations that are only qualified to provide advice on how to improve your financial situation.
It is up to you to decide whether a credit repair company or credit counselling agency is the best solution for your financial situation but with both designed for different purposes, you must do your research beforehand.
What does a credit repair company do?If you have found yourself searching for “credit repair Canada”, you may be wondering what exactly a credit repair company does and whether you could benefit from using the services of a credit repair company.
The role of a credit repair company is to ensure your credit score is as good as it possibly can be by removing inaccurate information from your credit report. This process can differ from company to company but typically involves the following steps:
Review your credit reportThe first thing a credit repair company will do is ask for copies of your credit report from each of the two credit reporting agencies – Equifax and TransUnion. This is because each credit bureau, or credit reporting agency, contains slightly different information about your credit history and, therefore, slightly different credit scores.
They will then review your credit report, addressing any glaring discrepancies that are taking a toll on your credit score, and recommend ways that you can make improvements.
Credit repair companies are trained to know what to look out for and can save you a considerable amount of time and effort by scouring your credit report line by line to pick up on obvious inaccuracies.
Negotiate with creditorsThe next step involves negotiating with credit bureaus and creditors, such as a credit card company, to remove derogatory marks from your credit report. This can range from sending a request to validate information to sending a cease-and-desist letter to debt collectors.
When information on your credit report is challenged, credit bureaus have up to 30 days to investigate and take action. If, for whatever reason, they are unable to verify the information, it must be corrected or removed as soon as possible.
However, if credit bureaus believe a dispute is unfounded or has been submitted in error, they may choose to ignore it.
Provide adviceFinally, a credit repair company will provide expert advice and guidance to ensure your credit score stays above a certain threshold, from the best tools to use to the best accounts to apply for.
This can help you protect your credit history and avoid finding yourself in a similar situation down the line.
What information can a credit repair company remove from my credit report?It is widely believed that credit repair companies can transform your credit report from poor to excellent, regardless of what your financial situation is.
Credit repair companies can only remove information from your credit report that shouldn’t be there and are legally unable to remove information that is accurate.
The type of information that a credit repair company can remove from your credit report includes:
- Accounts that don’t belong to you
- Bankruptcy or other legal actions that don’t belong to you
- Misspellings (such as negative entries belonging to someone with a similar name)
- Entries that are too old to be included
- Debts that can’t be verified
We have a wide range of debt management solutions that could help you write off up to 80% of your debts
How long does a credit repair company take to improve my credit?On average, it takes between three and six months to improve your credit through credit repair services.
There is no quick fix to repairing your credit, even when you enlist the expertise of a credit repair company, so you must be patient and trust that the end result will be worth the wait.
How long it takes for a credit repair company to improve your credit also depends on what your current credit score is and how many changes are needed to help you reach your ideal credit score.
How much does a credit repair company cost?The cost of using a credit repair company can vary from company to company with some charging monthly and others charging per item removed from your credit report.
Generally, most credit repair companies charge a monthly fee of between $80 and $100 for a standard credit repair service. Still, it is not uncommon for companies to offer multiple tiers and charge around $150 for quicker results.
This may seem expensive but by paying a credit repair company to improve your credit, you are likely to save thousands in the long run through lower interest rates and better credit options.
How do I choose the best credit repair company?The Financial Consumer Agency of Canada has warned of scammers within the credit repair industry. It is, therefore, important you choose a legitimate company that has your best interests at heart.
Before you use a credit repair company, you must always read reviews and testimonials and avoid companies that promise to remove accurate information from your credit report. If companies make promises that seem too good to be true, they usually are.
Furthermore, you should also steer clear of companies that aren’t upfront with their pricing strategy or that guarantee results before they even look at your credit report.
Can I repair bad credit myself?It is possible to repair bad credit yourself but, depending on how serious your financial situation is, this can be an extremely difficult and time-consuming process and may require you to deal directly with credit bureaus and creditors.
Some of the ways you can repair your credit yourself include getting a secured credit card, making the minimum payment every month, keeping your credit limit low, checking your credit reports regularly and consolidating your credit card debt.
Regardless of whether you choose to fix your credit yourself or use a credit repair company, you must remember that improving bad credit is no easy fix and it can take some time for your credit report to reflect any changes.