Credit Repair Companies vs. Repairing Your Own Credit: Which is Better?
A recent study found that 56% of Americans have bad credit. So if you’re looking for a way to repair your history, you’re not alone. It can be hard to figure out what to fix and how to fix it. To do this you may be considering a credit repair company, but how effective is it? How expensive are these services? Can you repair it on your own? Here’s some information you should know when deciding to repair your credit on your own or hire a service.
When it comes to repairing your credit, the process is similar whether you fix your own credit or hire a credit repair company. Firstly, you’ll have to obtain your credit report — some agencies require you to get your credit report before you approach them. After receiving your credit report, you need to comb through it for mistakes either with the company you hired or by yourself. A study by the Federal Trade Commission found that one in four people had an error on their credit report that affected their score negatively, so be sure to examine your credit history and dispute any inconsistencies.
As you can see, the process is the same no matter which you choose. The main difference is that if you decide to approach a credit repair company, you’ll have the assistance of someone who has experience in finding errors in credit reports. Additionally, some credit repair companies use attorneys which can help solve issues that have been disputed — but weren’t ruled in your favor.
The difference in cost between repairing your credit yourself or through a company is where significant differences appear. When repairing your credit yourself, you can usually do it for little to no cost — basically, the only thing you need is your credit report. Each year, you can get a free credit report from each of the major credit reporting bureaus: Experian, Equifax, and TransUnion. The website Annual Credit Report was set up by these three companies to allow you access to your free yearly credit report — you can even dispute errors using this website.
The average cost of a credit repair agency is $37 to $100; you also may have to pay a startup fee of $19 to $150. This startup fee covers administration costs and access to your credit report. Credit repair companies usually require monthly subscriptions, which renew as long as you use the service — and considering some disputes can take months to resolve, you may end up paying hundreds of dollars to raise your credit.
In the end, choosing to fix your score yourself or hire a company is up to you. Someone may choose to fix their credit themselves if they have knowledge, expertise, and time. The benefits of this are that fixing your credit yourself has little to no cost. However, if you feel as though you aren’t qualified to fix your credit, a business can help you. Credit repair companies are also particularly useful if you need additional tools, or if you have several errors on your credit report.