Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

02/15/2010
How much can credit restoration companies really help?
How much can a person generally expect to pay to get their credit restored? What are some good companies out there? Have you heard of the credit restoration company Credit Trax?
Michael A. Masiello:
expert info »
Best recommendation is the Consumer Credit Counseling bureaus. They are legit and not scams. I have found most others package outrageous promises, settle for 50 cents on the dollar and other scams to be less than honorable and usually B/S. Best to check with your state’s Attorney General’s office for approved providers.
Jana Castanon:
expert info »
You never want to use a credit restore company to repair your credit. You will be paying upwards of $500 for the service, and they will not being doing anything that you cannot do yourself. Basically, what they do is dispute everything on your credit report. By law, what cannot be verified within 45 days they have to take off. Unfortunately, most of the time when they find out that the debt is valid; it comes back on the report. This is just a temporary fix. My suggestion is to make an appointment with a certified credit counseling agency that can go through your credit report and offer viable solutions. You can find one at www.nfcc.com. Another thing to remember, if an agency is asking for money up front before they offer their services, you need to stay clear. You would also want to ask how long they have been in business and if they are a member of the Better Business Bureau.
H. David Whalen:
expert info »
It would be wise if you checked with the Better Business Bureau and Chamber of Commerce, if they are local. If it is a large corporation, the state's attorney general and/or the Federal Trade Commission might be of help. Do your research first.

As far as credit repair goes, do some research with your local consumer credit agency and not-for-profit organizations. Look for free workshops in your area and check with the local library for books and articles on the issue. If you do some research on your own, you shouldn't have to pay someone. I think you are motivated enough to be successful.
Pablo M. Bianchi, CFP:
expert info »
I know that many companies promote themselves as companies that are able to restore your credit. The reality is that most of them are unable to do much other than charge you lots of money for no results. Recently I was told that a new not-for-profit company specializing in credit restoration opened a branch in Camden, NJ. The name of the company is Consumer Credit Counseling Service of Delaware Valley. I would start by talking with them, but by no mean take this as an endorsement.
Gail V. Marquet:
expert info »
Only you can restore your credit by paying off unpaid/overdue balances. Companies that advertise they can restore your credit are a big rip-off. You can check with the FTC [Federal Trade Commission] or your local Better Business Bureau for records of these companies, but in almost all instances they will take your money and not do anything about paying your bills. It's in your best interest to contact the company, work out a payment plan and pay on it yourself. Then when the balance is paid in full, you can contact the company again; request that a written "paid in full" statement be sent to you and also request that they correct your credit report reflecting that the balance is now paid off.
Gerri Detweiler:
expert info »
Credit repair is a tricky topic. On the one hand, consumer advocates, credit reporting companies and government agencies will tell you that you should never pay someone to "repair" your credit. On the other hand, credit reports and scores are very important and often confusing. So it's no wonder that some people are attracted to the idea of just turning their credit over to a professional firm.

First, keep in mind that no company has tricks or techniques that can guarantee the removal of negative information from your credit reports. If they do, they may be doing something illegal and they'll get caught sooner or later.

The credit repair process is one of addressing negative items (usually by disputing inaccurate or incomplete information), and building positive new credit references. A lot of that can be done on your own, and you"ll find some good free information online to help you. FICO® also sells a credit score simulator that will help you play "what if" scenarios with your credit scores. And Credit.com offers a truly free Credit Report Card that will give you an analysis of your credit scores with suggestions about what you can do. There are also two books that will really explain credit reports and scores to you: Credit Scores and Credit Reports by Evan Hendricks, and You're Nothing But a Number by John Ulzheimer.

If you have taken advantage of these free services and you don't know where to go next, then you may be interested in working with a credit restoration professional. Please be careful. Make sure they are licensed in their state (if required), and avoid any that hype their services ("We can remove judgments, foreclosures, bankruptcy!" for example). Understand that they cannot guarantee to improve your credit, and they cannot charge you until after their services have been rendered. The FTC does not approve credit repair firms.