There are a variety of credit repair services available to consumers who have less than ideal credit histories. Low credit scores can make it quite difficult to obtain car loans, mortgages, or even emergency credit cards with low limits. Because credit is such an important financial asset, an entire industry has emerged for credit repair services. There are two primary methods through which credit repair services assist their clients in improving their credit scores, debt consolidation or reduction, and credit report monitoring and correction.
Debt reduction and consolidation services help to repair credit by assisting their clients in negotiating more manageable repayment terms with their creditors. These companies act as an intermediary between the clients and their creditors and are attractive because they offer simplified repayment by consolidating payments to all various creditors into a single payment, made to them, which they in turn parcel out to all the creditors. Debt consolidation companies also often reduce debt by negotiating lower total balances and cessation of additional late fees. These companies are especially effective in working with credit card companies and collection agencies. Customers are often thrilled immediately because the phone calls usually stop within a week of enrolling in a debt consolidation service.
Creditors are willing to work with debt consolidation companies because they view them as a welcome alternative to charging off accounts and selling them to outside collection agencies. In many cases, these accounts have already been charged off, but are still owned by internal collection departments. Creditors are aware that the odds of repayment increase significantly when debtors use consolidation credit repair services. Some of the more well known debt consolidation companies are:
American Financial Solutions, Freedom Debt Relief, Care One, Consumer Credit.com, Consolidated Credit Counseling Services
The second major method used by credit repair services is a legal approach employed by law firms that specialize in challenging items found on credit reports of their clients. These companies are extremely effective because they understand the laws associated with consumer rights and credit reporting. Creditors are generally aware that the average consumer does not know their rights regarding credit reporting, and therefore often become lax in their observance of regulations governing reporting of transactions.
These specialized law firms request copies of their clients' credit reports and review them, looking for any items that may be incorrect, misleading, unverifiable, unfair, or otherwise flawed. Once they have found these items, they directly challenge their validity with the creditors. If the creditors are not able to satisfactorily respond to the challenges, the credit bureaus must remove those items from the individual's credit report. Rather than legal loopholes, these law firms make use of the important consumer protection laws that most people are unfamiliar with to safeguard their clients' rights. These firms generally charge a onetime startup fee along with a monthly fee for as long as their services are used. A few of the larger law firms that offer credit repair services include:
Lexingtion Law, Sky Blue, Ovation Credit Services, Trinity Credit Services