Credit Repair: Should You Pay to 'Fix' Your Score?
When your credit is poor, it can be tempting to look for a quick fix. And if you pop on over to Google, you’ll find no shortage of services promising to goose your credit report, boost your score, and make you look like a better borrowing candidate (for a fee, of course).
Experts beg to differ. At best, so-called “credit repair” services will lighten your wallet to the tune of hundreds — if not thousands — of dollars, performing due diligence you can easily do yourself for free. At worst, they’ll carry out activities that are unethical or even illegal. If their tricks are discovered, those black marks will go right back on your credit report — and don’t even think about trying to get your money back.
“There are all kinds of services out there that claim to have ways to get negative information removed,” says Andrew Pizor, an attorney at the National Consumer Law Center. But the only legitimate "fixes" credit repair services can actually make — correcting errors on your report or having outdated information erased — can be taken care of on your own.
One sneaky tactic these companies employ is to bury credit bureaus with a blizzard of letters disputing late payments and other negative information, in the hopes that some harried employee will remove it by mistake. Since letters disputing credit report information can be sent electronically or via snail mail, these “repair” services have a couple of fronts from which to launch their blitz.
Pizor says there are a couple of problems with this practice. For starters, the bureaus are allowed under the Fair Credit Reporting Act to disregard letters that aren’t sent from the consumer. And even if their deluge of paper tricks a bureau into incorrectly removing a negative item like an unpaid bill sent to collections, they tend to catch their mistakes quickly. “Even if that happens, those items tend to come back shortly thereafter. It doesn’t last,” Pizor says.
Another tactic used by some “repair” services is to add your name to a credit account belonging to somebody else — a “tradeline” in industry parlance.
“I'd be cautious about services that promise to improve your score by adding tradelines,” says Bruce McClary, spokesman for the nonprofit National Foundation for Credit Counseling (NFCC). “There's a legal way to do it, but ... if corners are cut and laws are broken, you could be just as liable as the service provider,” he warns.
Credit bureau Experian uses even stronger language: “Buying tradelines may be viewed as deceptive by lenders and credit reporting agencies, and could even put you in danger of committing bank fraud,” the company says.
It IS legal for family members to add you as an authorized user to one of their credit cards or lines of credit — which is a good way to improve your score if you have very little credit history, according to Pizor.
“If your family wants to take a risk on you, that’s legal,” he says.
Still, Pizor cautions, if that family member fails to make a credit payment on time, it will ding both of your scores.
“Any bad information on the primary user's account is likely to hurt the authorized user’s score,” he says.
There are other ways to improve your score without the help of devious "repair" services.
Start by checking to see if there is any wrong information on your credit report, and file a dispute yourself. (If you do this, the FTC recommends sending a letter to the credit reporting bureau via certified mail so you have proof the company received it.)
If everything checks out, you can also enlist the help of a nonprofit to boost your score. The NFCC has a program called Sharpen Your Financial Focus to help people improve their credit profiles. Although it’s not an instant fix, it does work: Ohio State University studied the program and found that, after a year and a half, lenders were more willing to extend credit to people who went through the program.
There are also two new services that give you “extra credit” for good financial practices in areas that aren't traditionally covered by credit scoring models.
In early 2019, credit bureau Experian launched Experian Boost, a free service that lets you include utility bills, telecommunications, and streaming service charges into the picture lenders get of your track record. Users see an average credit score increase of 13 points, according to Experian. The same year, credit score developer FICO launched a new scoring model called UltraFICO, which incorporates bank account activity into a user’s score. These services are particularly useful for people with very little credit history.
“Improving your credit isn’t something you can fix overnight," says Joanne Gaskin, vice president of scores and analytics at FICO. "But making an action plan and taking the right steps with healthy habits can help you get there.”
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