When should you take service of a Credit Repair Company?

When should you take service of a Credit Repair Company?

Credit Repair companies are organizations that specialize in helping their clients in getting a healthy credit score. If for some reason or a combination of reasons an individual has a poor credit rating, these agencies can come to the rescue and improve the credit rating over time.

Before discussing this further it is important to mention that credit repair companies do not have the authority or the ability to remove or alter any information that is mentioned on your credit report. While they can help you in identifying the problems, fixing them, getting errors removed or negotiating on your behalf they cannot change the report. If in case of any error, the concerned bank or lender has to be contacted which in turn will inform CIBIL which will then make the requisite changes?

You might be wondering why we need a credit repair agency at all.  There are instances when you can sort out problems on your own like in the case of a CIBIL dispute where you can fill the requisite form and get the error rectified. However they may be times when credit repair agencies are required. Some of these instances are discussed below:

Unable to Identify the Problem:

There might be times when you know that the credit score is low but you are not in a position to find what the problem is.

Shreya paid all her EMIs and credit card bills on time but despite that her home loan was rejected due to a low credit score. She could not find any obvious solution till an expert told her that her credit utilization ratio was too high.

Well the above cause may not sound so complicated but there are times when to score may be low due to a combination of small issues which you are unable to pin point. In such a scenario services of those specializing in credit repair may be required to understand the underlying issue, which is resulting in poor credit score.

Cannot Find a Solution:  

After you have identified the problem or problems the next thing is to find the solution for it but. What if you are unable to find a workable solution? The solution has to be practical (so that it is possible to implement it) yet effective; even sometimes for simple issues series of steps might be required to improve cibil score. If you are planning debt consolidation then you will have to start by looking for a viable alternative, then start paying off the highest rate debt first and so on. If the calculations or options appear to be too complex then you could consider a credit repair agency.

Lack Discipline:

More often than not a low credit score reflects lack of financial discipline. Identifying the problem and then finding the solution are useless if you lack discipline to follow your plan through. Credit repair is not an instant fix, it may takes months (depending on how complex things are) to get things back on track. Not being able to stick to financial regime could put you back to square one. A credit repair agency will work out a plan for you and make sure that you stick to it without fail. A simple solution like not spending too much on your credit card might fail simply due to lack of discipline. As stated earlier credit restoration requires patience, while on a do it yourself mission you may end up losing it.

Too Many Agencies are Involved:  

There might be times that too many stakeholders may be involved in trying to get a credit score back in the green especially if the debt has been sold and resold to a collection agency or it is an old dispute. Trying to pin point which is the right agency or who is the right the person to deal with to reach a solution can sometimes be a challenge. Negotiating with them or reaching a solution that actually helps the borrower in some way is the next hurdle. Taking a NOC from an old lender, negotiating a payment plan with credit card agencies, working out a balance transfer plan, paying to a collection agency require knowing how the process works and time and patience. If you feel you may not be equipped to handle the agencies on your own then yes credit repair companies work for you.

No credit repair company can work magic and give you a healthy score just like that. Even if you hire one you still have to work along with them to get your financial health back in shape. The edge these companies have over laymen is the expert knowledge, patience and of course resources.