You should exert the effort to be on top of your financial situation, which means that as much as possible, your income should be sufficient to cover all your necessary expenses. In parallel to this, you should also ensure that your bills are settled timely because any late payment can hurt your credit score. However, there are instances wherein no matter how cautious you are with your credit score, you may find errors in your credit report that need to be fixed. It is in these instances wherein you may need to engage the services of a credit repair agency.
But is hiring a credit repair agency worth it? The simple answer is that it depends. Yes, hiring a credit repair agency is worth it with the following scenarios:
Deal with Complex Issues
When you have to deal with complex issues surrounding your credit report, then it may be worthwhile to hire a credit repair agency. For instance, you may be faced with issues like a duplicate collection of data or if your situation has several negative issues, then perhaps you should get some help. However, you need to ensure that you only engage with the best company for credit repair. In this case, they will be able to guide you through the entire process of credit repair.
On the other hand, you need to be wary of credit repair companies that promise to remove all negative information from your credit report, particularly if this is accurate information. Thus, when a credit repair company suggests that you dispute even the accurate information in your credit report, then this should be a red flag already because it is tantamount to fraud. A reliable credit repair agency won’t also pressure you to pay for their services upfront.
Immediately Use your Credit
Another instance where it is worthwhile to engage the services of a credit repair agency is when you immediately need to use your credit. For example, you may be planning to start a small business within the year. In this case, you need to ensure that you have an excellent credit score, particularly if you intend to apply for a loan to fund your business venture. Thus, consider getting services that clean up your credit report. Keep in mind that an additional 50 to a hundred points in your credit score will already go a long way when it comes to increasing your chances of being approved for a loan.
Lack of Time
Finally, when you simply don’t have the time to deal with your credit repair issues yourself, then it is worthwhile to hire credit repair services to help you handle your credit report issues. Keep in mind that the credit repair process is a time-consuming one that most people with full-time jobs won’t be able to handle accordingly. With the services of a credit repair company, you won’t have to go through the grueling process yourself.
On the contrary, you can also work to fix the problems yourself by:
You have the opportunity to dispute the errors you find in your credit report directly with the major bureaus. In this modern time, almost everything can already be done online, even disputing the errors in your credit report. This proves to be one of the fastest ways to start fixing your credit report issues.
Working on your payment history
Another thing that you can do in an attempt to address your credit report issues yourself is to work on your payment history. Thus, make sure that you pay your bills on time and avoid any late payments. Remember that late payments can drag your credit score down deliberately. In this case, exert the effort to bring a late account current as soon as you can.
Using less of your available credit-repair
Lastly, you should also exert the effort to use less of your available credit to lower your credit utilization ratio. The lower it is, the better your credit score and credit report will be. In this case, what you can do is attempt to make multiple small payments in a billing cycle. This will eventually help reduce your credit utilization ratio.
There are instances wherein it is worth it to hire a credit repair agency, particularly when you need to deal with complex issues as well as when you need to use your credit immediately. It is also beneficial to hire a credit repair agency when you simply don’t have the time to attend to the issues of your credit report yourself. Otherwise, it might be better for you to consider fixing your credit report by yourself.
How to Build Credit Without a Credit Card – MoneyWise.com
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Ask Gareth Shaw: ‘I’m scared I’ll get rejected for credit card because of mistakes I made in the past’
Answer: Well done to you for getting back on your financial feet. Climbing your way out of debt is a marathon – it takes sacrifices and planning, so you’ve taken some really important steps in your financial journey.
The good news is that the negative information – the records of missed payments, defaults and even county court judgments – won’t stay on your credit report forever. Details of your late payments can be viewed for six years after they were settled. Searches and rejections of credit typically disappear after 12 months. So this dark cloud won’t hang over you forever.
Before we talk about applying for credit again, there are steps you can take to improve your credit health. Firstly, you should review your credit reports and make sure there are no errors that could be holding your score back. You can get your credit report for free from each of the three credit reference agencies – TransUnion, Equifax and Experian – and can ask them to investigate errors. Lenders and credit reference agencies have 28 days to respond to disputes.
Registering to vote by getting on the electoral roll can boost your credit score, while you may even be able to add the record of your monthly rent payments to your credit score by asking your landlord to report rental payments to firms like The Rental Exchange, CreditLadder or Canopy.
Experian has launched a new tool that allows you to share information about your banking habits and subscriptions – information which is not traditionally factored into your credit score – in order to increase your score. That means paying your council tax or even paying for Netflix and Amazon Prime could give your score a boost.
If you still want a credit card, your choice is likely to be limited to a particular set of cards designed for people with poor or ‘thin’ credit histories. These are known as ‘credit-builder’ cards, or sometimes ‘bad credit’ cards.
These cards have higher interest rates compared to the most competitive products in the market, to reflect the risk that a lender is taking in by providing credit to someone with a history of repayment problems. You can expect to find an APR of around 29 per cent. They also have lower limits, so when you apply, don’t be surprised to find that the lender will initially only give you £250 to £500.
However, these cards can be used to demonstrate that you are a responsible borrower, can repay on time and stay within your credit limit.
Here’s the golden rule – avoid borrowing money on these credit cards. Purchases tend to be interest-free for 55 days, after which you’ll be charged a considerable amount of interest. So limit the use of these cards, and when you do use them, try to pay them off in full. If you don’t pay on time, you will lose any promotional offer, be hit with a fee and your provider will report your missed payment to the credit reference agencies, reversing any good work you might have done. Set up a direct debit to ensure that your minimum payments are met in advance of the credit card payment date.
When you apply, use an eligibility checker first. This will ask for some basic information and carry out a ‘soft search’ on your credit file, returning a list of cards and the probability of your application being successful. That would be a helpful guide to find a card that is likely to accept you.
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