|
Over one million people file for personal bankruptcy every year. Consumer
debt is a huge problem in America today. As a result, many people don't know how
they got in debt and don't know where to turn for help. Many people go to credit
counselling agencies for assistance.
A credit counselling agency is defined as a company that advises you on managing
your money and debt and helps you develop a budget as well as offers free
workshops. Some credit agencies or credit repair companies may advise you on
managing your money, restore your debt and may develop a budget (spending plan)
for you.
When choosing any agency to assist with repairing your credit ask what services
are provided based on what your needs are. If you are only concerned with
restoring your credit then search for those types of companies. If you are
looking for a full service company then look for credit counselling agencies or
credit repair service companies.
However, I would use caution when hiring a credit counselling agency or credit
repair service. Here are some red flags when considering working with a credit
repair counselling agency or a credit repair company:
1. If a company provides guarantees that they can increase your credit
score by a certain amount of points don't use them. They are no guarantees
because information can be removed from your credit report and your credit
score will increase but it depends on your credit score, the type of credit
that was delinquent, your debt-to-income ratio and many other factors.
2. Check out the companies' website and check to see how long the company
has been in business.
3. Check to see what fees are being charged. I charge my customers a
one-time flat fee of less than $200. If you have to pay a registration or
initial fee and then a monthly fee of X dollars that defeats the whole
purpose of getting out of debt.
4. If you are already working with a credit repair counselling agency or
credit repair company ask to see sample letters that will be sent to your
creditors. If a company refuses to show you (which most probably will) then
you have no idea what was stated in the letter. I give all of my clients
companies of the letters I write to repair their credit.
5. Don't do business with a company that says they will use rapid credit
scoring to repair your credit. This method jams the credit reporting agency
system by sending many letters about the same issue for inaccurate and
accurate information. The system gets confused and removes the items
mentioned in the letter from the person's credit report. However, the credit
reporting agencies do audits of their systems and eventually the items will
be put back on your credit report.
6. Ask the company what is the process they use to restore your credit, if
the company does not tell you then don't use them.
|
