Credit Repair Frequently Asked Questions
- What is Credit?
- What is credit repair?
- Why is there the need of repairing credit?
- Will lenders or credit bureaus help me?
- What about using a commercial credit repair company?
- What kind of help do I get from Alliance?
- What do Credit Bureaus do?
- How do I get my credit report?
- What to do after getting my credit report?
1. What is Credit?
“Credit” is the privilege to use the financial means of another party. When you apply to any financial institution for a loan, mortgage or credit card, you need to provide evidence of the ability to repay, and a history of repaying past credit. You can get better terms with lower interest rates if you have good credit ratings, but with a poor credit rating, you may not get credit at any price. Building a good credit record is important to achieve many desirable goals, such as homeownership, vehicle financing, and various forms of wealth building.
2. What is credit repair?
Credit repair is the process of cleaning up inaccuracies on your credit report, removing wrong or inaccurate information, protect your identity and become more informed on your credit issues. If you repair your credit file, it is likely your credit score will improve, and thereby will obtain better interest rates and save money.
3. Why is there the need of repairing credit?
Because your credit record will influence your qualification for credit in the future, and could possibly affect rates for your current credit lines. Accordingly, if your credit report is incorrect, the reparation of the credit file will help improve your chances. A good credit score helps you obtain low interest rates and long term loans, like home loans or car loans. Lenders may charge high interest rates or impose undesirable repayment plans for you. Given the stakes and the consequences involved, it is clearly to your advantage to work toward recovering from a bad credit rating.
4. Will lenders or credit bureaus help me?
There are two answers, depending on what stage you are at:
If you are currently experiencing financial hardship,and are unable to make the minimum payment, or catch up on past due payments, one option is to approach your lender and negotiate with them. Lenders may respond positively to your efforts and may restructure a payment plan. In cases of late payments, you can enter into an arrangement, and possibly not report late payment status.
If the hardships are in the past, but now you are facing the results of a less-than-perfect credit history, lenders and the credit bureaus have an obligation to update and correct any inaccuracies, errors, or omissions. Beyond that, there are numerous other actions you can take to rebuild your credit. Our counselors can help create a plan that is customized for your situation.
5. What about using a commercial credit repair company?
Commercial repair companies are staffed with trained individuals in the credit field, just like our organization. They will perform the credit repair process and claim a fee for it, normally at a much higher cost. Be sure that you understand that, with the relevant statutory rules and obligations, NO ONE, not a lawyer, commercial credit repair firm, our organization, or you, can legally remove accurate, negative information from your credit report.
6. What kind of help do I get from Alliance?
There are two types of help:
First, if you are currently facing financial distress and are unable to make timely payments, talk with our counselors about programs for helping you recover. There are multiple solutions, but a common one is to let us negotiate with the lenders, get collection calls to stop, get your interest rates reduced, penalty fees stopped, and in many cases, get your account “re-aged”, which results in the current account status showing as current, not past due (which would further tarnish your credit report). This is called a Debt Management Program.
Second, our counseling agency can help train you to repair and rebuild your credit. This involves reviewing your credit reports, develop a plan and recommend specific action, providing tools to execute the plan and actions, provide credit building techniques, and coach you long term to get where you want to be.
7. What do Credit Bureaus do?
Credit Bureaus are companies that maintain records of your credit lines and performance. Records go back seven years, and up to ten years, for bankruptcy data. Creditors, banks, mortgage companies and other financial institutions supply this information to the credit bureaus, and they compile them into a credit report. A credit report has details of how you have managed credit in the past, so other lenders can judge your credit worthiness. They tract the following information:
- Open accounts.
- Closed accounts.
- Credit limits.
- Current balances.
- History of on time and late payments.
- Collection actions.
- Tax and other liens
- Current address, and former addresses
8. How do I get my credit report?
Contact any of the following bureaus to request your credit report.
The three major bureaus:
9. What to do after getting my credit report?
Review your credit report carefully, and check for any negative information. If you find an error or omission, there are two ways to dispute them, either with the credit bureau or with the creditor providing the information. Federal laws give you the right to challenge the accuracy of the credit report and to eliminate incorrect items. Credit Bureaus are required to investigate the items within 30 days. It is considered a best practice to focus on one error at a time.