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Paid Credit Repair Increases Consumers’ Credit Scores Surprisingly Well, New Study Finds

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MIAMI, April 20, 2021 /PRNewswire/ — In a nationwide survey, 61.6% of U.S. adults (ages 25+) who paid for professional credit repair services received a 65 point credit score increase or higher. Credit repair services were also shown to be more effective when consumers stayed with the repair company for over 6 months. But buyer beware! 12% of respondents thought the repair company’s business practices were ‘Shady’ or ‘Borderline illegal.’

According to new research from transformanceusa.org, 61.6% of consumers who paid for professional credit repair services for 6 months or more saw an increase of 100 points or more to their credit score. Only 12% of respondents said they had a credit score increase of 24 points or less.

Overview of Credit Repair Services – Credit repair is a $3 billion per year industry in the U.S. according to IBIS World. Companies that provide credit repair services help consumers with bad and/or damaged credit. Common services offered are the removal of negative items from the customers’ credit reports (late payments, charge offs, collections), setting up payment plans with creditors, and debt consolidation plans.  

Impact of the Study – Many personal finance experts question if credit repair companies are truly effective and question if credit repair is ethical.  The transformanceusa.org study surveyed 500 U.S. adults ages 25+ in February 2021 and found that a surprisingly high percentage of respondents indicated a positive credit score gain, especially when the respondents stuck with their credit repair company for 6 months or more, and mostly reported a favorable user experience. Some of the key statistics found were:

  • The most common credit score gains reported were 100 to 149 points (26% of respondents) and 75 to 99 points (17.2% of respondents) compared to only 8.4% who reported a gain of 0 to 24 points
  • 48% of respondents who used credit repair services for 6 months or more saw an increase of 100 points or more to their credit score
  • 31% of respondents said the lifetime total of all monthly fees, start-up costs, and additional fees was between $250 to $500 (most prevalent answer)

Consumers’ Surprising Criticism of Credit Repair Companies – Even though consumers’ results (as measured by credit score increase) were very impressive overall, a significant percentage of consumers criticized their companies’ business practices and billing.  Key statistics:

  • 12% of respondents thought the repair company’s business practices were “Shady” or “Borderline illegal”
  • 25.8% thought the credit repair company kept them as a client longer than it should have taken – They felt “strung along”
  • 18.6% said the credit repair company made it difficult to cancel

For questions about the survey or to comment on the findings, contact [email protected]

SOURCE transformanceusa.org

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Review: Bank of America® Customized Cash Rewards Credit Card for Students

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Now that most students are starting to return to in-person school, many young adults and their parents are once again looking for the right credit card. Having a credit card offers students a secure and convenient method of payment. It also helps students build credit and even earn some rewards. The Bank of America® Customized Cash Rewards Credit Card for Students excels at all of these tasks.

Key Terms

  • Welcome Bonus: Earn $200 cash rewards after spending $1,000 within 90 days of account opening.
  • Rewards: Earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Receive 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.
  • Annual Fee: None
  • APR: 13.99% to 23.99%
  • Promotional Financing Offer: 15 months of 0% APR on both new purchases and balance transfers.

How This Card Works

This card is a very competitive rewards card, especially for a student card. New applicants earn $200 in cash back after making $1,000 worth of new purchases within 90 days of account opening. You also earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Additionally, you earn 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.

But rewards shouldn’t be the most important thing to students. Instead, consider this card because it’s very easy for Bank of America customers to manage, along with their checking and savings accounts. It also helps students to build their credit by offering them a free FICO score each month. It’s compatible with digital wallet technology and can be managed by a full featured mobile app.

New accounts also receive 15 months of 0% APR financing on both new purchases and balance transfers, and there’s no annual fee for this card.

Advantages

While most student credit cards are very basic, this one comes with generous rewards, including a new account bonus. Other advantages are its promotional financing offer and free monthly FICO score. There’s no annual fee for this card, but that’s expected with a product designed for students.