Bad credit can cost you by way of high interest rates and higher insurance premiums. It can delay dreams of buying a house or starting a business.
People with bad credit often seek out credit repair services to help them reach their financial goals.
Before choosing a credit repair service, however, make sure you know what they can and can’t do, and watch out for scams.
What do credit repair services do?
Several factors go into your credit score, so the reason for your bad credit may not be immediately apparent. It may be that you’ve missed a few payments, have accounts in collections, filed bankruptcy, or your credit card balances are too high.
In cases where negative items are legitimate, you simply need to wait it out. Most negative items take up to seven years to fall off your credit report. They also lose their potency over time as new, positive information gets reported to the credit bureaus.
When negative information on your credit report is incorrect, you can submit a dispute to the credit bureaus to correct the error. But according to a March 2017 Consumer Financial Protection Bureau report, consumers often complain that the bureaus are slow to respond to disputes – and sometimes don’t even fix the problem.
What’s more, the dispute process can be confusing and require a lot more time and effort than you have. You may also need to contact the creditor in question to get documents to substantiate your claim. The process can be overwhelming.
This is where credit repair services come in – they can do the dirty work for you.
Credit repair services know the ins and outs of credit disputes. If you choose a good one, they’ll understand your rights and which laws protect you.
Watch out for scams
If you have bad credit and are desperate for a quick fix, you may be more susceptible to a credit repair service fraud. Here are a few things to watch out for:
1. They ask for money upfront
The Credit Repair Organizations Act prohibits credit repair companies from charging before they’ve performed their services. If a company asks for payment just, run in the other direction.
2. It sounds too good to be true
Unfortunately, there is no quick fix to credit report problems. Credit bureaus have 30 to 45 days to respond to your dispute. It may also take a while to gather the documentation to provide evidence of your claim. It’s a red flag if a credit repair service promises overnight results.
Also, credit repair services can’t legally promise things that they can’t do for you. They know that rebuilding credit is your goal. But if you see an ad stating that they’ll guarantee a solution, or they can get rid of legitimate negative items on your report, it’s a scam.
3. They don’t do all the work
Before you sign a contract, understand exactly what the credit repair service will be doing for you. Their goal should be to make sure your credit report is 100 percent accurate, fair, and substantiated. As such, they should be doing more than simply submitting disputes in your name – something you can do on your own for free.
To get your money’s worth, ensure that the company will reach out to the named creditors to get evidence for your dispute. They should also share which laws protect you in your particular case and how they will use those laws to your advantage.
Know your rights
If you feel uncomfortable at any time before signing a contract for credit repair services, listen to that feeling. Also, let the company know that you understand your rights regarding credit repair services, including:
- You have the right to sue a credit repair company if it violates the Credit Repair Organization Act in any way.
- You have the right to cancel your contract for any reason within three business days of signing it.
- The agreement must include a full and detailed description of the services they will perform. It should also include a timeline they’ll adhere to as they complete them.
Should you opt for a credit repair service?
If you want free credit repair services, you’ll have to do it on your own. The good news is that you can do just about anything a credit repair service can do. The real question is whether you know how to.
If you have just one or two simple errors that you can easily prove, you likely don’t need to pay a credit repair service to do the work for you. When going this route, use the Federal Trade Commission’s website to learn about your rights and steps you can take to rectify the errors.
If your case is more complicated or requires more time-intensive work, hiring a credit repair service may be worth the money. Take a look at what you’re up against and consult a credit repair company to see whether it’s worth doing on your own or hiring them. If you go this route, choose a company that is open and honest about what they can provide. They should also outline their commitment to your rights and the laws that protect you.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|