Credit repair is a scam!

 

   When it comes to getting your credit score higher to qualify for a mortgage or other type of loan credit repair can be one of the biggest scams ever created. It's not that credit repair can't help especially if someone has stolen identity, negative credit that is not theirs, or other errors on their credit. The problem comes in that fixing these items doesn't usually help your credit score.

   Most credit repair companies solicit businesses and individuals telling them how they can fix their credit. If fixing the credit is repairing and removing mistakes and errors then there is some value but beware even fixing these issues can actually lower your credit score. A lower credit score often makes it harder to qualify for a loan.

   How can fixing credit lower your credit score? Good question. Unfortunately the answer is a little complicated, but here is a basic version. Your credit score is made of your entire credit history both good and bad credit, anytime you remove or fix an item it can have huge consequences on your credit score. Even a bad debt may have had some payments made on time and given you a higher score than if it didn't exist at all.

    But that isn't the reason why credit repair is a scam, the reason it is a scam when it is done by most companies is the inability to forecast the consequences. First off if a credit repair company ever promises to improve your credit score for getting a loan then walk the other way. The credit repair organizations do not have access to the same FICO scores that lenders use, nor do they have some of the tools that lenders have to evaluate how the credit score will change if certain things are done. So when a credit repair company tries to remove an item, typically by disputing it, it can actually lower the credit score and make it harder to get a loan.

   Nowadays most lenders won't even accept a credit profile that contains disputed items because they know that until the item is out of dispute the correct credit score rating will not be known. Another problem is when a company gets an item in dispute they sometimes sell the debt to another collector which makes the credit bureaus think it's a new negative debt and drop the score or even worse the company will provide proof that it is the clients and then start reporting late payments constantly which drops the credit score like a rock.