When you have a bad credit score, you have a few restrictions on your financial life. This is the reason why a lot of people with bad credit score turn to companies offering credit repair services. When your finances are already not good, you do want to know how much credit repair cost. However, this should not be the only question you should be asking. There are a lot of other things you have to consider. So, do some research before you go to a credit repair service company.
How Much Does it Cost?
The amount you have to spend on credit repair can go from zero dollars to a thousand dollars. It’s all on you whether you want to spend or not and if yes, how much.
DIY Credit Repair
You can take all the steps required to improve your credit score. However, you need to learn a lot and have some patience and time. You can get annual free copies of your credit report from the three credit bureaus. Make sure that you are getting copies from all three credit bureaus.
Review three copies and look for errors, especially in the negative information on your credit reports. Now you need to report these errors to credit bureaus and get them removed. You can dispute these errors via mail.
Credit Repair Software
You can use credit repair software. It can be minimal or very in-depth. You can simply purchase relatively cheap software. You will get a dispute letter. You can follow directions and handle each incorrect detail. For in-depth software, you need to spend a few hundred dollars. The software also helps in tracking your credit score. Credit repair software can cost from $30-$400+.
Credit Repair Services
You can hire a credit repair professional to increase your credit score. There are licensed professionals who understand the ins and outs of credit score. They know how scoring models work and how to work with credit bureaus and people reporting to the bureaus. You have to pay an initial setup fee that can be $10-$100. After that, you have to pay a monthly fee that can be $30-$100. This is the most productive of the three approaches.
The credit repair company:
- Gets and reviews your credit reports from credit bureaus
- Identifies and disputes issues
- Monitors your credit report
- Keeps you updated on your credit score
- Refers you to creditors and lenders
- Educates you on credit management
- Protects you from frauds such as identity theft
Shall You Pay For Credit Repair Services?
When you have a bad credit score, you should pay for credit repair services. The approach of using software for credit repair is not popular. Working with a credit repair company is the best approach because the professional does not only work for you but also with people reporting your payments.
There are consequences of having a bad credit score including:
- You will have to pay more interest rate and this will lead to more debt.
- You will have trouble in getting financial products approved.
- You will find it hard to manage your debts.
- You will not even qualify for some financial products.
- Insurance premiums will be expensive.
- You will have trouble in finding employment.
A lot of people have doubts when it comes to hiring professionals. However, credit repair companies do work.
Credit Repair Organizations Act
Before hiring a credit repair company, you should learn about the Credit Repair Organizations Act.
- There must be a contract.
- The company should provide you with an estimated timeframe.
- You have the right to cancel the contract within three days with no penalty.
- The company cannot ask for advance payments and have to provide you with a price estimate.