There are certain things that many, many people struggle with, but it's become taboo to talk about it in our society. We all want to put our best foot forward, but the fact of the matter is that a lot of people are struggling with debt, but they feel so much shame that they just continue to kick the can down the road. A lot of times, people don't even know where to start. Here at Credit Guide, we want to break those taboos. We want debts to be something that are okay to talk about, okay to ask questions about, okay to get help with. See if you can relate to any of the following questions:
- Do you ever find yourself feeling anxious to go check your mail?
- Letting certain envelopes pile up because you just can't deal with them right now?
- Nervous to open up your credit card statements because you don't want to see that balance owed staring up at you?
Even though the minimum payments might not be massive, it's very common for great people to miss out on a payment or two. It's not always a matter of not having the money, sometimes it's just a result of the stress and procrastination. Other times, sure, you don't always have the extra cash sitting around at the right time, or maybe you went through a rough-path and now you're trying to pick up the pieces?
When you start to feel the pressure, the stress, the fear…when it feels hardest to look at where you're at, that's when it's a crucial time to really make a move when it comes to your personal finance. It's time to strike. It's not too late. No matter how bad things are when it comes to your credit and your bills, the longer you wait, the worse they'll get. There are things that you can start doing today that will help line everything up for an easier tomorrow, and we're going to be covering credit repair from A to Z, whether you're decent at this whole personal finance thing or you're just starting to learn the ropes.
Before moving forward, let's take a moment to understand how this all started. You might be able to pinpoint one specific event, like a huge medical bill, that really started the downward spiral of debt, or you may have woken up one morning – realized you were terrified to look at your credit card statement – and realized that things have gotten out of your control. In our society, we're shunned and made to feel irresponsible for taking on too much debt, yet how many people get letters in the mail with pre-approved credit cards on the day they turn 18 years old? It's a weird dichotomy where we're hassled, harassed, fined, and sometimes even put in jail for owning money to the wrong people – yet at the same time, we have 0% APR offers, cheap financing, and credit being shoved down our throats constantly to buy things we can't really afford in a world driven by consumerism. The point we're trying to make is that if you're drowning in debt, don't be too hard on yourself. You already have the stress from the debt itself taking its toll, so instead of beating yourself up about it, you're here to fix it – and that's something to be proud of. You're on the right path, you're doing the right research, and you're going to get past this.
Schools don't do a good job of educating young people about real-world finances, but we're not here to place the blame because that won't help anything. It is what it is, so let's fix it.
It's not a matter of just clearing up the debt and starting back at zero, you'll also be armed with new techniques and strategies to ensure that you're able to not only reach a state of being debt free, but to stay there. Also, not all debt is bad, and sometimes taking on debt is actually a better financial decision, and sometimes it's just a matter of knowing the difference between bad debt and good debt, and shifting some of your bad debts over into the good kind. If you aren't an expert at that, don't worry, we will also provide guidance on how to find an honest and ethical company to help you along the way.
What is credit repair?
Credit repair is the act of fixing a bad credit score or report. There are a lot of different things you'll need to do, but you don't have to go at it alone. We've got your back. Creditors, agencies, and debt collectors know the rules inside out. They know every little crevice to hide in, they know every possible way to take advantage, and they know how to cover their butts when they make a mistake. They deal with these types of things every single day. You don't. It's not a fair playing field if you go at them alone. You are inherently at a disadvantage, you owe them money, you're beholden to them, and they know every trick in the book – the fair and ethical ones, but also the sneaky ones. It's not unheard of for a collections agency to bend the rules, so you've got to know what's okay and what's not okay. First and foremost, no matter who you have in your corner helping you out, you'll need to be your own advocate, and that's what we're training you to do right now.
Sometimes, credit reporting agencies just flat-out screw up and report negative things on your credit that aren't true. The debt agencies may have lied to them, or simply submitted a form incorrectly. They're humans, they make mistakes. In either case, your credit score is hurting through no fault of your own. If your score already wasn't great, and now there are errors on top of that, you're in a really tough position – but you can fix this, you can get through it.
From things like mistakes, typos, identity theft and errors, to issues with your budget and legitimate concerns from lenders, this can all be fixed.
What kinds of people need credit repair?
We've talked to a lot of people who have pre-conceived notions about credit repair. They think that their situation isn't bad enough to need it, or that they'll be able to dig themselves out on their own. For some reason, our society has tried to attach a certain amount of shame when it comes to asking for help with financial things. In reality, it's the opposite. You should take pride in starting your battle towards a perfect credit score. And don't get it twisted, there are days where it will feel like a battle, but there are also days where it will feel like a walk in the park. You'll have many small victories along the way, and then when it's finally sorted out, and the huge pressure is lifted, you'll feel like a whole new person.
Young people, older people, life-long residents, recent immigrants, men, women, factory workers, CEOs…credit problems can strike anyone. Getting help to fix your credit doesn't make you some kind of low-life, it makes you a smart person who realizes there are some issues that need to be addressed, and is taking steps to do that. Before we go any further, pat yourself on the back.
Just like that feeling of anxiety and procrastination that stops you from wanting to open your bills sometimes, it's the same thing when it comes to taking steps like checking your credit score and actually trying to fix it. It's HARD to do, but dreading it for months or years on end, while it gets worse and worse, is harder in the long-run. Most things in life are never really as bad as worrying about them feels like, have you ever noticed that?
So, to answer the question of what kinds of people seek out help with credit repair, the answer is smart and responsible people who may have gone through some tough times, but now they're coming out on the other side. Tough times don't last, but tough people do.
How does it work?
As a consumer, there are some things that you need to know before we move forward. There are credit repair organizations out there that can help you along this process, but they don't have any magical powers to do things that you can't do on your own. They can do it for you, and they have a lot of experience, but if you really take a lot of time to educate yourself as a consumer, you can definitely go at it alone. Whether or not you'll get the same results, or if it'll be worth the effort it takes, that's something that only you can answer. You should never pay a credit repair agency a huge sum of money upfront, and if they promise you a fresh start – like a brand new credit report that wipes away all of the history and starts you back at square one – you should look somewhere else (We'll cover this and more in a lot more detail in just a minute or two.)
It's actually against the law for these organizations to make those types of claims. It's also legally required for credit repair organizations to let you know that doing this on your own is also an option. During the “wild west” days, there were certain organizations who would act like their services were the only way to repair your credit, or that they had some kind of secret connections that made it way easier. Thankfully, those days are behind us, and a lot of the bad-apples weren't able to stay in business once they became accountable for their claims. These days, with rules and regulations in place to help and inform the consumer, you're able to make a smart decision.
The first step is to find out what your credit score is, and there are multiple ways to go about that. Next, look at the items that are contributing to that score, look at your overall report. Are there things on there that are just completely false? Those are the low-hanging fruit that you can deal with right away. Also, are there any negative notations from debt collectors, missed payments that have been reported from your credit card companies and banks, or anything else? Sorting out those debts is important. Sometimes, you can actually negotiate the debt to be lower. If the collector has you tagged as unlikely to pay them back, they would rather get something instead of nothing, and since they already bought your debt (in many cases) for pennies on the dollar, you might be surprised how low they're willing to settle.
As a rule of thumb, you'll want to attack the highest interest debts first. Debt consolidation can help by taking all of the money you owe to these various places for various interest rates, and combining it all into one payment. Simply making some phone calls to the people who are putting negative strikes on your credit report can help get the ball rolling. Come at them humbly, even if they've been harassing you for years. Tell them you want to pay them back, but you'll need them to work with you. Ask them flat-out if they would be willing to settle the debt right away, and how much that might cost to just wipe it out. Debt consolidation is a whole other can of worms, so we aren't going to get into it too in-depth in this article, but just in case you weren't aware of it before – now you know it exists.
You'll talk to the credit reporting bureau and point out any mistakes, you'll talk to the various agencies that you owe money to, and try to keep a paper with all of your progress on it so you'll know exactly where things are it. This can be a very daunting task, because it requires you to face off against certain ghosts from your past. It can stir up weird memories and regret, but remember – you're moving forward, and that's what is most important. Remember, doing this all on your own is a perfectly reasonable plan of attack, and while the credit repair organizations don't have any magical powers, they do have a lot of experience and they know how to talk to these people on your behalf. Sometimes, it's worth it to just let somebody else handle the heavy lifting for you, so that you can focus on things like working to earn more money to pay off that debt, spending time with your family, and doing things you love to do.
How long does it take to fix your credit?
It's tough to say exactly how long it will take to repair your credit since this is something that varies greatly from person to person. It depends on where you're starting, and it depends on why your credit needs repair in the first place. On top of that, it's not something that happens instantly. Even after you've had the negative items fixed or removed, you're looking at a few months or even upwards of a year until the changes finally show up. That's no reason to not get started today, however, because the sooner you get started – the sooner you'll reach the finish line and the sooner you'll be able to stop any new negative things from popping up on your report. It can also go a lot quicker than that, too. We do not want to get your hopes up in thinking that it will be fixed instantly, but we also don't want to scare you into thinking that it will take longer than it actually might take.
5 things you can do right now
Whether you decide to tackle this mountain alone, or with the help of a professional, there are some things that you can do today to get the ball rolling.
- Request a copy of your credit report: You can't fix what you don't know. This is the first step, and also one of the most difficult. Get this out of the way, and you're golden.
- Make a very basic budget: Just know what comes in each month, and what goes out. Calculate the total you earn, and the total you spend. Also, calculate how much you owe to various creditors. How much can you afford to put towards debt each month?
- Make some tough phone calls: Now that you have a rough idea where you're at, you can start making some re-payment plans. Again, it's really not uncommon to be able to negotiate better deals, especially for any debts that are wiped after bankruptcy. They'd rather get as much as they can, instead of nothing at all.
- Sort out this month's payments: While you're working on the past, you need to make sure that you're also staying current moving forward.
- Take a deep breath: There are going to be ups and downs during this process, but take a deep breath and give yourself another pat on the back. You've made it this far. Good job. You're going to conquer this obstacle.
5 common mistakes to avoid
Whether you're repairing your credit solo, or seeking out the help of a professional to fight by your side, there are certain mistakes that should be avoided. There are red flags with certain credit repair organizations that will let you know to avoid them, and there are certain things to watch out for. Here are 5 to keep in mind.
- False promises: If a credit repair organization promises you that they'll get you a brand new credit file from scratch, they're lying.
- Huge fees: If they're asking for massive fees that need to be paid upfront, beware.
- Don't expect results immediately: Even if you go at this yourself, and make progress, the results won't show up right away. That's okay. It took a long time to get into this mess, it'll take a while to fix it, too.
- Don't be too trusting: If someone says they're going to do something, double check. Keep track of the times you make your calls, and who you're speaking with on the other end. Hold the agencies and creditors accountable. Some debt collectors can be total weasels, so you need to stay on top of things to make sure that what needs to get done – actually gets done.
- Don't be long-winded: When you're filing a dispute about your credit report, be clear and concise in your communication. They don't need to know your life story, be quick and to the point to avoid confusion or misunderstandings.
Obviously, we're barely even touching the tip of the iceberg here. Some of the people you'll be up against are armed with years of experience and they know the rules inside out, which also means they know which obscure rules are easier for them to get away with bending and breaking. Now, that doesn't apply to all of the organizations you'll be dealing with, some of them are great and they operate perfectly ethically – just don't assume that they all will!
How can you tell if a credit repair company is legitimate?
If you speak to multiple credit repair agencies, you'll notice certain patterns. Some of them will just give you kind of an off-vibe, and you should probabally trust your gut. It doesn't take much to start up a credit repair service. Just because a company is just starting out, that doesn't mean they're bad, but generally it's a good idea to stick to the highest-reviewed and the best-known brands that have been at this for a long time. Experience goes a long way when it comes to helping people to repair their bad credit reports.
A legitimate company will want you to understand the rules. We already discussed how some debt collectors thrive on the fact that you don't know your rights, but a good credit repair specialist will make sure you're completely informed so that you can make smart decisions. They'll guide you through the whole process with patience, so that you're making informed decisions. They'll also be able to explain to you exactly what they're doing on your behalf. If you're getting any impressions of secrecy, just walk away. This is your credit score that we're talking about, there's nothing for them to keep secret from you. You have every right to know exactly what is going to be done, so don't settle for anything less.
If you ask what they're going to do for you, and they kind of beat around the bush and won't give really direct and specific answers, you don't want them handling your affairs. Not all credit repair companies are the same. Some are completely on the up and up, dedicated to helping their customers get back on track while earning fair fees, but there are still some sharks in the water who see you as vulnerable prey. We've taken a look at all of the top credit repair companies, in order to make sure that you'll be working with one that has your best interests in mind. The last thing you need is yet another adversary through this process, especially one that you've hired yourself.