Who Can Really Benefit From Credit Repair?

Credit repair helps thousands of people every year to improve one of the most important facets of their personal finances. However, poor marketing practices and legitimate success stories published in the media have led to many people being disillusioned or misinformed about the repair process and what it can offer. Although no credit product or service can promise gains in your score in a short time period, it is not unlikely for those who are truly in need of credit repair to achieve surprising gains in their score within just months of beginning a program.

Although it is difficult to define exactly who is the perfect candidate for credit optimization, the ideal situation for someone who wants to repair their credit can be roughly explained as follows.

You must be able to stay current on your bills and have finances that are remaining fairly stable. Which means that you are not taking out many new credit accounts or switching jobs. Ideally, you will also have some money in savings account that you can use to pay off any old accounts, or to use in case of unexpected life events. This situation will set you up for the best chance at preserving your newly-cleaned credit.

During the course of optimization, you may also need to open some new lines of credit in order to build positive credit. This is most commonly a secured credit card, but there are other types of credit that can help you build or rebuild your credit.

Unfortunately, part of the misconception about the repair process is that it is some kind of "magic wand" that can cure financial problems instantly. The truth is that if you cannot pay your bills (on time or at all), or are way over-extended on credit, there is almost no purpose to beginning a repair program. Even if you manage to remove some or all of the negative factors on your report it is likely that you will end up with poor credit again after all is said and done. Although it is beyond the scope of this article to discuss over-extended situations, it is likely that someone in this situation would see a bigger benefit from counseling, debt solutions or even assistance from a bankruptcy attorney.

If, however, you fit the bill for someone who is in a good situation to pursue credit optimization it is wise to consider your options before jumping in to any program. As we have discussed, your credit is one of the most important assets in your personal finances and it is important to choose the right method for you.

First, it is important to fully understand your credit situation and what the positive and negative factors affecting your score are. In this way, you can make sure that you are not buying the wrong solution, or worse, some "snake-oil" from someone who is just after your money and not interested in helping you.

The first step to understanding your credit situation is to get your credit reports from all three bureaus: Equifax, Transunion and Experian. Although it is possible to receive one free report every year we always recommend our clients pull a quality credit report which merges all three bureaus and gives you a credit score (the free annual report does not include a score). Many companies will you a free credit report for signing up with their credit monitoring service. These monitoring services are a great idea for anyone pursuing the repair process as they allow you to see how your score is changing as you improve your credit.

If you do not understand everything on your report it is a good idea to seek help. There are many free or inexpensive services that can help explain the items on your report. There are also many books and online guides which can help you decipher the elements of your report.

Once you understand the elements of your credit report it is time to analyze it with a fine-tooth comb. If you are analyzing your report yourself, print it off and mark anything that is inaccurate. Remember, this is your credit score and it affects your life, if you have any doubt that an item on your report is 100% accurate, mark it as inaccurate. The Fair Credit Reporting Act was put in place to protect consumers from errors in their credit, and if you have any question about the accuracy of an entry it needs to be investigated.

Always remember that credit repair can be a very daunting task for the individual that requires diligence and learning. If you feel like you need assistance at any time please seek help. It is important not to make a bad credit situation worse!