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SALT LAKE CITY — You've likely stumbled across ads from companies boasting they can fix bad credit and clear your credit score of bankruptcies and judgments. But can they really guarantee to improve your credit score?
One simple concept is self-evident: if your credit is fixable, your credit can be fixed. But if your credit is not fixable, nobody can fix it. So, companies that guarantee to fix anyone's credit are liars.
They make such great promises: "We can turn any credit score into a higher score, really." Or, "Sweep your personal credit for good." Or, "Remove multiple charge- offs and negative items." And even, "We will work to delete bankruptcy, judgments, tax liens, collections, charge-offs, late payments, inquiries, repossessions, and foreclosures."
Can they really do that?
Martha Wunderli directs the non-profit group, Utah AAA Fair Credit Foundation.
“They make big promises and charge a fairly good amount to do that,” she said.
She said many credit repair clinics offer to remove incorrect information from your credit file, for a fee. But you might be able to do it yourself, for free, by contacting the credit reporting agency.
“There’re often mistakes on there. You just call, write a letter and dispute what the issue is. It’s easy,” she said.
Wunderli said some credit repair companies will simply dispute. Credit bureaus might place those disputed items on hold, at least for a while.
“It will disappear for a short time, then come back. But the length of that bad record has been lengthened by being on the record,” Wunderli said.
Unflattering items that are wrong can be removed. But accurate information will usually reappear within a month or two because the creditor that first reported those items to the bureaus will report them again.
So, credit repair agencies can't wipe those from your history permanently.
“They’re taking advantage of people who are very stressed out by their finances and not really able to think clearly because they are so overwhelmed,” Wunderli said. “They go for the quick fix and all it does is delay it.”
Wunderli said you might end up deeper in debt, causing your credit score to drop even more. And while no one can remove accurate information from your credit score, she said you can add an explanation to your report.
“Medical emergency, change of life situation, loss of employment,” she said.
Still, there is no quick fix to improving your credit, even if you're willing to pay someone hundreds of dollars to do it.
“If we can get people with a longer term plan, it’s really very freeing,” she said.
Again, not all credit repair agencies are bad. One good one, for example, will not take your money if you have a bankruptcy, a repossessed vehicle, no job, a recent divorce, etc. It will refer you to someone who can help you manage your money.
However, if you experienced those things but now have a job and an apartment, and you're starting to get back on your feet, the business will take you as a customer and try to gradually improve your credit.
