Credit restoration involves addressing the negative items on your credit report by disputing them. It also entails implementing strategies to boost your credit score. This guide dives into how credit restoration works, how it compares to other types of credit services, its limitations and the potential outcomes of using this approach to improve your credit health.
What is Credit Restoration?
Credit restoration is a process that can assist you with boosting your credit rating by disputing inaccuracies on your credit profile. However, it often takes time and effort to see results, so it’s vital to remain patient while working to restore your credit.
How Credit Restoration Works
You can take the DIY approach or hire a credit restoration company to do the legwork for you. Either way, here’s a step-by-step breakdown of how credit restoration works:
Step 1: Get Copies of Your Credit Reports
A copy of your credit report from the major credit bureaus – Experian, TransUnion and Equifax – is available free of charge at AnnualCreditReport.com. From now through the end of 2023, you can get free weekly access. Once 2023 ends, access will revert back to the annual model.
Step 2: Review Your Credit Reports
Examine each credit report in its entirety and make note of any inaccurate or outdated information that’s present. Also, be on the lookout for incorrect personal information or errors with account status or payment histories.
Step 3: Dispute Any Errors You Find
File disputes with the respective credit bureaus. Below is a list of dispute options by credit reporting agency:
- Experian: Visit www.experian.com/dispute, call 866-200-6020 or send your written dispute and supporting documents to Experian, P.O. Box 9701, Allen, TX 75013.
- TransUnion: Visit https://www.transunion.com/credit-disputes/dispute-your-credit, call 800-916-8800 or send your written dispute and supporting documents to TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA 19016.
- Equifax: Visit https://www.equifax.com/personal/credit-report-services/credit-dispute/, call 1-888-378-4329 or send your written dispute and supporting documents to Equifax Information Services, LLC, P.O. Box 740256, Atlanta, GA 30374.
Step 4: Consider Hiring a Credit Restoration Company
If this process is a bit too intense or complicated for you at the moment, hiring a credit restoration company may be ideal. They can do the legwork for you in exchange for a monthly fee.
For example, The Credit Pros is a company that can help you get fast and effective results with your credit restoration efforts in things like credit report corrections, increasing credit scores, or establishing credit. Accredited by the BBB, their credit services start at only $69 per month (with a $119 first work fee), offering a 100% 90-day money-back guarantee. Complete a short form or call (727) 306-8201, and a credit specialist from The Credit Pros’ team will contact you to assess your credit restoration needs.
Step 5: Monitor Your Progress
Regardless of which option you choose to restore your credit, it’s vital to keep tabs on your progress. Notate your starting credit score, and update this figure in your records each time you check your credit reports and scores. Also, review your credit reports regularly and file disputes promptly if the need arises.
Are Credit Restoration and Credit Repair the Same?
Though credit restoration and credit repair have the same end goal, there are differences between the two.
Credit restoration focuses on addressing the inaccuracies in your credit reports by filing disputes with the credit bureaus. On the other hand, credit repair hones in on the specific financial issues affecting your credit rating and often involves negotiating settlement offers with creditors for outstanding debts. You may also need to hire professional assistance if you adopt this approach.
What Are Your Rights Under the Fair Credit Reporting Act (FCRA)?
The Fair Credit Reporting Act (FCRA) law promotes the accuracy, fairness, and privacy of your information in the files of consumer reporting agencies. These include credit bureaus and other specialty agencies that house credit data.
Here’s an overview of your rights as a consumer under the FCRA:
- Credit report access: You have the right to request and obtain a copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months for free. To request your free annual credit report, visit AnnualCreditReport.com. (Note: You can access your free credit reports weekly through the end of 2023).
- Right to dispute inaccurate information: If you find inaccurate information on your credit report, you have the right to dispute the information. The consumer reporting agency has 30 days to investigate and respond to your dispute. If the disputed information is found to be inaccurate, the agency must correct or remove the information from your report.
- Right to know who requested your report: You are entitled to know the name of any company or individual who has obtained a copy of your credit report within the past year (or two years for employment-related requests). If your application for credit, insurance or employment has been denied based on your credit report, you have the right to be told which credit reporting agency provided the report that led to the denial.
- Limited access to your information: The FCRA limits who can access your credit report to those with a valid need, such as creditors, insurers, employers, landlords and other business entities. Unauthorized access or release of your credit report is a violation of the FCRA.
- Right to Seek Damages: If a consumer reporting agency or an entity using consumer reports violates your rights under the FCRA, you have the right to take legal action and seek damages from the responsible party.
How Can Credit Restoration Help Your Credit?
There are many ways credit restoration can help your credit. These include:
- Managing your credit utilization: Your credit utilization ratio, or the amount of debt you have compared to your credit limit, plays a significant role in your credit score. Aim to keep this ratio below 30 percent by paying down the balances on your revolving accounts (or credit cards and lines of credit). A lower ratio can positively impact your credit score.
- Establishing good payment habits: A consistent history of on-time bill payments contributes to 35% of your credit score. To help build a stronger credit history, ensure you always pay your bills on time. Setting up automatic payments or establishing payment reminder systems can help you stay on track.
- Addressing negative credit items: Tackling negative items on your credit report, such as late payments, charge-offs, or collections, can help improve your credit history. While most negative items will eventually age off your report, taking proactive steps to resolve any outstanding issues can expedite the credit restoration process.
Things That Credit Restoration Can’t Do
While credit restoration can be very beneficial for your credit health, it’s not without limitations. Some drawbacks to keep in mind:
- Credit restoration cannot remove accurate negative information from your credit report. If you have missed payments, accounts in collections, or other legitimate negative items, these will remain on your credit report for the designated time, typically 7-10 years. While companies may claim to remove such information, it is important to remember that their services cannot do anything beyond what you can do yourself for free.
- Credit restoration cannot guarantee a higher credit score. While disputing errors and addressing inaccuracies can have a positive impact on your credit score, there is no guarantee that your score will improve. Factors such as your credit utilization, payment history, and account age all contribute to your credit score, so it is essential to adopt responsible credit habits.
- Credit restoration cannot create a new credit history for you. Establishing a strong credit history takes time and effort, including making on-time payments, keeping credit balances low, and avoiding unnecessary new credit inquiries. Even after negative items have been removed from your credit report, you’ll still need to demonstrate healthy credit behaviors to build a positive credit history.
- Credit restoration cannot fix all credit problems overnight. It’s important to understand that improving your credit score may take time and patience. Depending on the complexity and number of inaccuracies, the credit restoration process can take several months, and the results may vary. It’s essential to stay consistent and remain patient throughout the process.
Does Credit Restoration Really Work?
Credit restoration can be an effective strategy to improve your credit score if you’re dealing with inaccuracies on your credit report. However, there are no guarantees you’ll get the results you want if you decide to dispute accurate and timely credit report data on your home or by using a credit restoration company.
Is It Worth Hiring a Company to Restore Your Credit?
Credit restoration companies can alleviate the work that comes with restoring your credit in exchange for a monthly fee. There are many reputable options out there, and these entities are required to follow certain guidelines per the Credit Repair Organizations Act.
If you’re considering this option, be sure to evaluate the company’s experience, reputation, fee structure and depth of offerings to make an informed decision.
