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Beware of credit repair

Q. We’re living in an apartment right now, but we want to buy a home.  After visiting with a Realtor, we learned that our credit isn’t good enough to qualify for a home right now. In the meantime, he suggested that we contact a credit improvement company. The company wants a lot of money to fix our credit, but we’re anxious to move forward with the home-buying process.  What should we do?

A. I’m disappointed to hear that you’ve been advised to work with a credit improvement company. If you were to choose this route, I firmly believe this would only compound your financial problems. Credit improvement companies, alternately known as credit repair companies, prey upon consumers looking for a quick fix.

Buying a home is a significant financial step, one you want to be certain that you are ready for. If your credit is an issue, it will take time for you to get things back on track.

Regardless of what you’ve heard, no one can remove accurate information from your credit reports. Assuming the information they contain is correct, negative information will typically remain on your credit reports for seven years.  No amount of money, wishful thinking, or exaggerated promises can change this.

So, what can you do?  Start by requesting a free copy of each of your credit reports by visiting www.annualcreditreport.com. Next, review your credit reports for accuracy. If you find any mistakes, you can dispute this information by following the process noted on the each credit reporting agency’s website. The dispute process may take some time, but it does not cost you anything.

After you get a handle on what is on your credit reports, I suggest that you enroll in a credit education program offered through a non-profit accredited credit counseling agency. In many cases, these programs are free, but if there were a fee, it would be far less what you would pay a credit repair company.  With the help of one of these programs, you can learn practical steps for improving your credit on your own, without paying someone else hundreds of dollars.

You could also make an appointment with a HUD-approved housing counseling agency for pre-purchase counseling. You don’t have to be ready to purchase a home in order to get pre-purchasing counseling, though you can still learn about the home-buying process and what it will take to legitimately improve your credit.

You’ll have to be patient and willing to take the necessary steps to improve your credit, but you can realize your dream of homeownership. In the meantime, hold onto your money and avoid using the services of any company that claims it can repair your credit.

Bonnie Spain is the executive director of Consumer Credit Counseling Service of the Black Hills, a United Way member agency. For more information, email credit@cccsbh.com.

The material in this transmission is provided for personal, non-commercial, educational, and informational purposes only. ACCE makes no representations or warranties with respect to the accuracy or completeness of the contents of this transmission and assumes no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. You should consult a professional where appropriate.


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