How Credit Restoration Companies Can Help You

Discover how credit restoration companies can help you improve your credit health. With their expertise in credit analysis, dispute resolution, and personalized strategies, these companies work diligently to remove errors, negotiate with creditors, and rebuild your credit. Take a proactive step towards financial success with the assistance of credit restoration professionals.

If you’ve been taking a look at your current credit and/or loans and wondering why your interest rates are so high, chances are your credit score is low.

Credit score is calculated by FICO and VantageScore based on your credit reports. TransUnion, Experian, and Equifax are the three credit bureaus responsible for developing your credit reports. To do so, they rely on submissions by credit companies, lenders, and collectors.

Your credit score is what tells future creditors how likely you are to repay your loans. The lower your credit score, the less likely you are to have credit and loans approved. Even when they do get approved, your payments are going to carry a higher interest rate. So the better your credit score, the less money you’ll end up having to pay.

But what leads to a bad credit score? And how can credit restoration companies help improve your score?

Let’s find out.

Table of Contents

Mortgage Correction

One of the most common errors credit restoration companies identify in credit reports is inaccurate mortgage information.

This happens when the credit bureaus receive inaccurate reports from creditors. Banks are one of the worst culprits – and they tend to be incredibly uncooperative too. If your credit history includes loan mods, foreclosures, and/or short sales, chances are there’s a mistake on your credit report.

Most often, short sales are erroneously listed as charge offs or foreclosures. Foreclosures are also regularly reported as a balance deficiency when they shouldn’t be.

Credit restoration companies will help you perform mortgage correction if this has happened to you. They’re typically very successful in having inaccurate mortgage data corrected, especially if you have supporting documents to back up the dispute.

Sometimes, litigation will be required as part of the process. The best credit restoration companies have a team of attorneys who will take care of the case on your behalf – at no extra cost to you.

Mortgage Derogatories

With the economy taking citizens on a rough financial rollercoaster these past few years, a lot of people end up foreclosing on their homes. For many, this is because the property value dropped drastically and they ended up having to pay more than it was worth.

From 2005 to 2011, a lot of people ended up just walking away from their homes for this reason. And although it gave these homeowners some immediate relief, it also damaged their credit.

What happens then? You’re left with mortgage derogatories on your credit reports.

Not all credit restoration companies are guaranteed to be able to help you remove mortgage derogatories. However, the most reputable companies most certainly will. Those with in-house attorneys or agreements with a law firm will aggressively and legally work at having any mortgage derogatories on your credit reports removed.

Collections

A lot of people who have low credit scores and debt issues end up sitting with multiple calls from debt collectors.

Debt collectors usually “buy” old debt from creditors. They act in an aggressive, intimidating manner when attempting to collect payment for these debts. Often, they push this into the sphere of debt collection harassment.

Examples of debt collection harassment include:

Repetitious calls
Calling a third-party (friends, relatives, or employers/coworkers)
Use of obscene language
Threatening harm of any kind
Not telling you who they are when calling
Publishing the names of people who owe debt (reporting to the credit bureaus is the only exception here)

Dealing with debt collection harassment can be as taxing as the debt itself.

First off, you should send a cease and desist letter to the collector. You then need to carefully document every call following the letter in order to properly report the issue to the Consumer Financial Protection Bureau if they do not comply.

Credit restoration companies can assist you by writing and sending cease and desist letters on your behalf.

There’s also a high likelihood that you’ll have collections noted in your credit reports. Your credit restoration company will advise you on the best way to go about having these removed, and help you to do so.

Charge Offs

Charge offs occur when you’ve missed too many payments. The creditor submits your account as a charge off to the credit bureaus and prevents you from making further payments with it. These can include credit cards, mortgage, and any other debts.

But just because your debt has been charged off, doesn’t mean you’re in the clear. You’re still responsible for paying that debt – and finding out who to pay can be a little tricky.

If the debt hasn’t been sold to a collector, you can arrange payment with the original creditor. Otherwise, you’ll have to pay the collections agency. Either way, it will be marked as a “paid charge off” on your credit report. Lenders look more favorably on paid charge offs than unpaid debt.

It can be tempting to try and negotiate paying for a smaller amount than what’s actually owed. Some creditors and debt collectors will agree to this – but in return, it will appear as a “settled charge off” on your credit report, and will still negatively affect your credit score.

So how can credit resolution companies help you with charge offs?

Well, not only are the numerous late payments going to be negatively affecting your score, but when your debt is reported as a charge off, your credit standing will suffer further. Credit resolution companies can advise you on how to deal with payments on time and better handle existing debt. This will help to start overriding the negative effect of having such derogatories on your credit report within two years.

Furthermore, once a total of seven years have passed (from the date of your first missed payment), the charge off becomes eligible for permanent deletion from your credit report. Not only will credit resolution companies assist in ensuring that the charge off information is correct, but once this period is over, they’ll take care of the dispute process for you.

Late Payments

Late payments can affect your credit score to a varying degree of severity.

Typically, one payment late by just 30 days can cause your credit score to drop anywhere between 30 to 100 points. How much so depends on a number of factors, such as: how often you pay late, how recently you’ve last made a late payment, and how much money is owed.

It also depends on your current credit score. A score of 780 (which falls into the “good/excellent” range) will drop by as much as 90 to 110 points with just one late payment of 30 days. By contrast, someone with a current credit score of 680 and two prior late payments (one 90 days late from two years earlier, and a 30-day late payment from a year ago) will only see a drop of 60 to 80 points.

Just like charge offs, late payments typically remain on your credit report for up to seven years.

Credit restoration companies will be able to determine the best way to get them removed sooner. For example, bank statements could prove that payment wasn’t late. Alternatively, if you’ve had a healthy record of paying on time since the reported delinquency, they can help you move for the late payment record to be removed sooner.

This can help you see an immediate credit score improvement of 30 to 100 points – which could easily take you from “poor” to “fair/average.”

Judgments

You may have come across the term “judgments” while researching credit scores and debts. So… what are judgments exactly?

Judgments are entries on your credit report that arise when a third-party has been hired by one or more of the credit bureaus to scrub public records at courts across the nation. If any court in the US has made a judgment (hence the name) regarding unpaid debts, collections, or any other financial obligations, the credit bureau(s) add them to your credit report.

As you can imagine, a number of errors occur very easily. And those errors can be very costly for you, as they negatively affect your credit score.

Credit restoration companies that handle judgments will be able to assist you in getting inaccurate entries removed from your credit report. Any other judgments that they deem disputable will also be targeted. Some credit restoration companies charge an extra fee for having the public records removed as well, while others include this service in their monthly fees.

According to Experian (one of the three credit bureaus in the US), judgments are no longer added to credit reports. This is good news for citizens, and may mean that credit restoration companies will no longer have to assist in having judgments disputed in the future.

Bankruptcy

Bankruptcy, on the other hand, is still very much a negative occurrence that will be added to your credit reports.

If you’ve ever had to file for chapter 13 or chapter 7 bankruptcy, it’s still negatively impacting your credit score for years after. Chapter 13 bankruptcy remains on your credit reports for up to 7 years – and chapter 7 bankruptcy for 10.

This does mean they’ll be automatically removed from your credit reports after the due amount of time.

However, in 2005, a class action lawsuit was opened against all three credit bureaus for including inaccurate bankruptcy information in the credit reports they were compiling. In 2009, the case was finally settled.

But reporting errors still reign rampant.

Credit restoration companies have excellent mechanisms in place to help clients have erroneous information removed from their credit reports.

Tax Liens

Tax liens – money that you owe to the IRS – are one of the worst derogatory entries to have on your credit report. That’s because they tend to stay there for far longer than any other negative entry.

Paid tax liens are automatically removed from credit reports only after 7 years have passed. Unpaid tax liens, on the other hand, will remain indefinitely.

Having these entries removed from your credit report requires specialized focus. That’s where credit restoration companies come in handy once again – they possess the expertise to assist in doing so.

Experian recently published an answer to their “Ask Experian” feature where they announced that tax liens will no longer be appearing on credit reports. As with the case of judgments also no longer being reported, this is very good news for the average citizen. With tax liens no longer on your credit reports, you can expect to see an increase in your credit score of about 30 points.

Student Loans

Student loans are one of the worst forms of debt in America. In fact, Forbes published an article in 2018 showing that $1.5 trillion is owed in student debt, between 44 million borrowers.

And there are many reasons people default on their student loan payments: lack of disposable income, job loss, and the ever-increasing penalties and fees these loans carry.

Any reputable credit restoration company will be able to assist you in two ways when it comes to student loan debt. First, they’ll help you have any defaults removed from your credit report. And to help you keep them off, the company will also give you actionable advise on how to avoid defaulting on your payments again.

Identity Theft

Identity theft is a pernicious crime. Theoretically: your name, driver’s license, and even your Social Security number can land in the hands of a digital hijacker, who then commits fraud using your details to protect themselves.

This has serious implications for your credit score – let alone the fact that you could end up with a criminal record for something you didn’t do.

It’s a very daunting task to try and get identity theft entries removed from your credit reports. Doing so requires following several highly specific steps before you can even begin the disputing process.

Credit restoration companies can be a major source of help here. They know all the consumer laws, as well as the right paths to take, and they’ll help you to understand these while assisting you with the process as a whole. Cutting right through the confusion, your credit restoration company can and will get you onto the right path in repairing your good name and reclaiming your identity.

Do Credit Restoration Companies Really Work?

Insofar as we’re talking about having erroneous and negative information fairly and legally removed from your credit reports, credit restoration companies really do work.

The most reputable and effective of these companies are those with years of experience. While there’s nothing inherently wrong with newer credit restoration companies, they do tend to lack the clout their older, more established competitors enjoy. And that experience and clout can go a long way in ensuring your credit restoration campaign ends with a credit report that’s as healthy as feasible.

However, you should be aware that credit restoration companies are somewhat limited in terms of how much they can affect your credit score.

For one thing, having negative and inaccurate entries removed from your credit reports will only help to improve your credit score to the extent that those entries were affecting your score to begin with. If an entry is barely making a dent in your credit score, having it removed will barely increase your score.

Nevertheless, as you’ve seen, there certainly are entries that – if they appear on your credit reports – have a very big impact on your credit score. Successfully disputing these can significantly improve your score. And of course, even those little bits add up too.

How Much Does Credit Restoration Cost?

This isn’t a very easy question to answer, as different credit restoration companies charge different fees.

Some charge a flat rate for their services, while others have pricing tiers with two or three different packages offering different levels of services. Sometimes, you’ll find something like a Pay for Results payment plan, where you pay a larger First Work Fee than you would with their competitors, and then pay for the number of specific deletions (usually per bureau) they succeed in securing on your behalf.

When it comes to monthly fees, you not only have to consider the company’s charges, but also how long it takes them to complete your credit restoration campaign. Typically, these last 6 to 7 months.

On average, you can expect to pay in the region of the following:

First Work Fees: $89 to $195
Monthly Fees: $69 to $279
Pay for Results First Work Fees: $379 to $579
Pay for Results Fee per Deletion per Bureau: $100
Pay for Results Fee per Public Records Deletion: $150

These figures are taken from our list of the Best Credit Repair Companies.¹ If you choose to go with another credit restoration company, you’ll need to verify their cost.

However, we feel that the above is a healthy price range to expect. Any less, and you’re likely to get substandard service; any more, and you’re being over-charged. You may have even found a fraudulent credit restoration company.

Conclusion

ValuePenguin reports that the average credit score in America is 695 (2019 projection).

This is good news, but you need to bear in mind that it’s an average. There are citizens with a credit score of 720 to 850 (“good to excellent”), as well as citizens with a score of 300 to 619 (“bad to poor”).

Even if you have a “fair to average” credit score (between 620 and 719), it’s going to be worth the expense of hiring a credit restoration company. There’s always room for improvement, even if you already fall under the “good to excellent” category.

Alas, if your credit score falls below 620, you definitely need to have some credit restoration performed.

If you’re still unsure of where you stand with your credit score, visit AnnualCreditReport.com for an updated copy of your credit reports from all three credit bureaus. Credit Karma will then help you to determine your exact score.

We’ve given you the necessary knowledge on what situations can hurt your credit. Now it’s up to you to take the next step.