Personal Credit Repair services do not have the best reputation in the financial industry. Scammers take advantage of people’s eagerness for a quick fix to their credit scores, leading to a lot of fraud in this field. However, it is important to note that credit repair is a legitimate service that is protected by federal law. You have the right to repair your credit, and there are many good reasons to do so.
Keeping that in mind, we have listed the top 12 reasons why you may need credit repair. If you are interested in learning more about the process in general, please refer to Crediitpro’s Credit Repair Guide for additional information.
1st Reason: There is a one in four chance that your credit report contains an error.
This is not a fabricated statistic; it comes directly from a study of consumer credit reports by the Federal Trade Commission. In 2013, the FTC discovered that one out of every four reports includes some form of error. What’s worse, one out of every five reports contains an error that would impact a consumer’s credit score. Additionally, one out of every twenty reports has an error that could lower your score by 25 points or more.
This is not a minor issue that only affects a small number of Americans. To put it into perspective, you also have a one in four chance of falling prey to credit card fraud. Therefore, it is important to consider all the precautions you take to prevent fraud. If you are not investing the same level of effort into keeping your credit reports free of errors, you are most likely missing out on potential financial benefits.
2nd Reason: Repairing your credit can help improve your credit score.
To clarify, the objective of credit repair is not to increase your credit score, but rather to eliminate errors in your credit report. However, more often than not, repairing your credit leads to an improvement in your score. It’s worth noting that there is a 5% chance that you may have an error that is reducing your score by a minimum of 25 points.
As a result, submitting a single credit dispute could result in a significant increase in your score in as little as 30 days. If you’re seeking a quick way to establish credit and begin working towards an exceptional score, credit repair is the way to go. Although enhancing your credit score is more of a pleasant side effect of credit repair, it’s frequently the fastest method of increasing your score.
3rd Reason: You have the option to refinance all of your loans at lower interest rates.
One of the primary advantages of having better credit is obtaining lower interest rates on all of your loans. The interest rates for which you are eligible are directly linked to your credit score, with better credit translating to lower rates. It also indicates that you can take advantage of the current low interest rates while they are available.
Lenders establish interest rates based on various factors, with your credit score being the initial consideration. However, the state of the economy is also a significant determining factor. The Federal Reserve raises its prime rate when the economy is strong, causing lenders to follow suit and raise their interest rates as well.
Currently, the economy is performing well, and the Federal Reserve has increased rates approximately six times since 2017. They have also indicated that they intend to continue raising rates. As a result, it is in your best interest to refinance any loans you have as quickly as possible. It is not advisable to delay this process. Repair your credit through credit repair services and then contact your lenders.
4th Reason: You can also negotiate lower interest rates on your credit cards by having better credit.
The interest rates on almost all credit cards are variable and can rise or fall based on various factors. As the Federal Reserve increases the prime rate, your credit card APR may also increase. However, if you have a good credit score and an error-free credit report, you can call your creditors to negotiate for lower rates. So, by improving your credit through credit repair, you can potentially save money on your credit card interest rates.
5th Reason: Obtaining approval for new financing will be much less stressful.
Waiting to hear from a lender about loan approval can be a stressful experience. It can be nerve-wracking to wonder if your credit score is strong enough to secure the loan you need, and being rejected for financing can be heart-breaking. Having good credit through credit repair can make the approval process less stressful and increase your chances of being approved for the financing you need.
6th Reason: You can become mortgage-ready.
Homeownership remains a significant part of the American Dream. With increasing rental prices, owning a home has become a more financially feasible option in many areas, but only if you meet the qualifications.
11th Reason: You might be able to avoid collecting efforts.
There is a little-known use for the service of credit repair, which is 90% about fixing problems in your credit report. When and why a credit agency must erase a bad item from your credit record depends on the law. If the credit bureau is unable to confirm the details of the debt with the owner of the debt, the item must be erased in accordance with the legislation.
Basically, the credit bureau contacts the person who owns the debt whenever you file a credit repair dispute and requests that they confirm the information. They must be able to demonstrate both the legitimacy of the debt and their ability to pay the claimed sum. The information must be erased by law if they are unable to do so and it cannot be verified.
This indicates that there may be a way to avoid debt collection by using credit repair. Ask the credit bureau to check it if you think a debt collector does not have all the details regarding your debt. It is essentially not your debt to repay if they are unable to. Your credit record no longer contains the collection account, which ceases lowering your score.
This is accurate even if you have a right to the initial debt. Debt buyers frequently purchase and sell debts with insufficient information. You are excused from responsibility if you confront them and they are unable to produce all the information required to confirm the obligation.
12th Reason: Risky alternative funding options can be avoided.
When your income is low, borrowing is a wonderful option to access the money you need. If you know how to make your money really work for you, you may finance a house improvement, a car repair, or even an investment. But you should always stick to conventional financing. You must have decent credit to do it.
There are many “alternative financing solutions” (AFS) that offer to deposit money into your bank account immediately and without running a credit check. Payday loans, cash advances, and short-term installment loans are all options. These are all essentially the same kind of loan tool. Additionally, you pay astronomically high finance charges for these sorts of credit as a result of no credit check.
Interest rates on short-term loans can reach 300% or even 3000%. For every $100 you finance, you might pay as much as $30. These lenders are also infamous for providing poor customer service. They take money out of your checking account through ACH Direct Debit to repay the loan. If you don’t have enough money on hand, it may be impossible to cancel or stop a payment, which could result in NSF fees on the loan and overdraft fees on your account.
Alternative funding options should never be used and are always a bad idea. As a result, you must have good credit to be eligible for conventional financing. If not, your quick cash solution can put you in a far worse financial situation than you were before.
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