There are a number of people who have gone into debt and seen their credit scores drop because of it. Whether the issue is too much money spent on a credit card or a large amount of unexpected medical bills, past due bills and unpaid debts can have a significant and negative effect on someone’s credit rating.
Without a solid credit score, people may struggle to get loans. If loans are made available, interest rates are likely to be high, and credit card companies may also require that individuals pay service fees just to have the credit card.
If you are in this type of situation, you may be interested in the help that credit repair companies can provide. Credit repair companies are able to provide a variety of types of assistance, and they may enable you to improve your credit score faster than you could on your own.
Clean Up Your Credit Report
One of the first steps many credit repair companies will take is to have you provide or run a credit report. Obtaining your credit report can help you determine where you stand by letting you know which companies you owe money to, how much you owe and if you are behind on your payments.
Another reason to run a credit report is to verify that the information in it is correct. Credit reporting services may not have the most accurate information about your accounts, and if you don’t actually owe some of the debts listed or your accounts are current when they are listed as delinquent, it’s important to have these issues resolved. Removing inaccurate information from your credit report can help immediately improve your score.
Most credit repair agencies will also provide financial counseling and help you set up a budget. The budget will normally include how to handle your regular expenses, like rent, food and transportation costs, as well as a plan of action for paying off your debt.
Agencies may work with you to find ways to reduce your outgo, such as by adjusting your cable TV packages, holding off on purchasing a new vehicle or cutting back on what you spend on entertainment. This money can then be used to pay off debt faster and get past due accounts current again.
Working With Creditors
Another thing that some credit repair companies may do to help you improve your credit score and eliminate debt faster is to work with creditors on your behalf. High interest rates and fees for late payments or going over your credit limit can make it hard to catch up. Additionally, fees and interest can drive up the total cost of what it will take to get out of debt.
By working with creditors, credit repair agencies may be able to help you obtain lower interest rates or be credited for fees that you’ve been charged. In some cases, a creditor may agree to take a lump sum payment that is a fraction of what you owe them. This is often an option that is available if your debt has been sold to a collection agency, and credit repair services can help you make these arrangements.
Prepare For Bankruptcy
Finally, many credit repair companies are able to help you determine if your best bet is to file for bankruptcy. If it is determined that bankruptcy is the best way forward, approved organizations can provide the pre-bankruptcy counseling you are required to have before filing for bankruptcy.
If bankruptcy is something you are considering, be sure that you verify that the credit repair company you are going with is on the government’s approved list. You’ll have to go through counseling again with another service if you decide to file for bankruptcy but did not initially work with a company that is on the government’s list of allowed credit counselors.