Credit reporting agencies maintain files on millions of consumers. Lenders considering credit approvals purchase credit reports on applicants and customers from these credit reporting agencies. Your credit report documents your credit history as it has been reported to the credit bureaus by the companies who have granted you credit. Your credit report details the types of credit you use, length of time your credit tradelines have been open, and if you pay your bills on time. Your credit report also tells lenders how much credit you have used and if you have applied for new lines of credit.
Tens of thousands of companies such as retail stores, credit card companies, banks, finance companies, and credit unions supply information to each of the credit bureaus with information about how you use and pay your accounts.
Many experts agree that your credit report and the information it contains is important because lenders use the information to determine whether you are a good credit risk or not. Your credit report is also used to determine interest rates, insurance rates, and in some cases employment prospects. Many consumers find themselves in a situation where they need help dealing with credit card debt and financial problems. Two options available are credit repair and debt consolidation.
What Are The Differences Between A Credit Repair Company And A Debt Consolidation Company
If you are considering credit repair or debt consolidation you’ll want to get a firm understanding of the differences between the two options before making your decision. Credit repair is the process of working with the reporting agencies and creditors to enhance your credit report as a way of increasing your FICO score. Credit repair can be done by a single person or a credit repair agency. The process usually includes investigating all the debt that an individual has acquired and developing a plan to reduce or eliminate the debt through credit repair. Credit repair is very significant to consumers interested in receiving the benefits of better credit including competitive interest rates and lower payments.
The Fair Credit Reporting Act (FCRA) establishes your right to contact credit bureaus to dispute items on your credit report. You can dispute any entries that are incorrect, incomplete or unable to be verified and if the bureau cannot prove that the information on the reports is accurate, then those items must be removed.
Debt Consolidation usually involves combining (or consolidating) multiple loans within a single loan, often with a lower monthly payment and a longer repayment period. This is known as a consolidation loan. Although you can do this on your own, most consumers turn to a debt consolidation company for assistance. A debt consolidation or loan consolidation company (or law firm) will come up with a payment plan you can afford that will satisfy your creditors. The intent is to reduce your interest rates enabling you to catch up on payments and save thousands of dollars. Most debt consolidation companies will attempt to have your late fees and penalties reduced or eliminated.
What Else Do I Need To Know
The important thing to remember no matter whether you decide on credit repair or debt consolidation is to do your homework and select a reputable firm that will deliver what they promise. Also, to make an informed decision, you should know the different options available to you. In addition to credit repair and debt consolidation you may see advertisements for debt management and debt settlement. Before you make a choice, get all the facts.