Credit is an important part of our financial lives and plays a role when it comes to borrowing money or buying a car or home. When people have less-than-perfect credit, it can make life more difficult in a variety of ways. For instance, higher interest rates may be charged on loans and it can sometimes be more challenging to get new credit cards or credit lines. In addition, some lenders may refuse to provide credit to those with bad credit or even deny them credit altogether.
Many people are seeking ways to restore their credit history and improve their scores. One option they may have heard of is working with a credit repair company. While these companies can be helpful, it’s important to understand the pros and cons of this approach. In this article, we’ll cover the basics of credit restoration and give you some practical strategies that you can use to help restore your own credit history.
What Is Credit Restoration?
Credit restoration is the process of disputing verifiable errors on your credit report that may be causing you to have a lower credit score than you deserve. Many of these errors are the result of mistakes made by credit bureaus, creditors, or identity theft. Credit restoration can also be a good way to correct inaccurate information that has been reported about you in the past, such as accounts that have been closed by creditors or incorrectly labeled bankruptcy information.
Ultimately, credit restoration is about ensuring that your credit report is accurate so that it can be used as a reliable source of information by creditors when you apply for credit. Often, removing errors from your report will also automatically improve your score. However, it’s important to remember that your credit score is only a small piece of the overall picture and that other factors can play an equally important role in determining your eligibility for loans or other services.
While it’s possible to work with a credit restoration company, the best way to repair your credit is by doing it yourself. The FTC has a great guide for DIY credit repair, and there are plenty of other resources available online that can walk you through the process step-by-step. It is important to note that while credit restoration companies can dispute inaccurate items on your report and can sometimes negotiate with creditors, they are not able to remove accurate information, such as a repossession or foreclosure, from your report.
While it’s possible to find a credit restoration service that can help you fix your credit, the best thing you can do for yourself is to avoid making any new mistakes and make an effort to pay off existing debt in a timely manner. Late payments can significantly damage your credit score and they stay on your report for seven years, so it’s important to be vigilant about paying on time. You can also try to reduce your credit utilization by not using more than 30% of your total credit limit, which will also have a positive impact on your credit score.
