What is the Difference Between Credit Repair and Credit Restoration

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A credit repair service enables you to dispute negative items on your credit report and correct them. These negative items are often inaccurate due to a variety of reasons, such as a missed payment or a debt repayment plan with reduced payments. In addition, negative accounts are only allowed to stay on your credit report for a limited period of time. However, you should be aware that debt collectors have the right to change the purge-from date for these accounts.

Credit repair

The first step in credit restoration is to understand your credit report. Credit reports provide important information to lenders so they can determine whether you are trustworthy. This information is also used to determine your credit score. If you are considering making a big purchase, you may want to improve your score before applying. In many cases, credit counseling or credit restoration can help you do this.

Credit restoration

Credit repair is a process that involves making changes to your spending habits and reestablishing positive payment history. It can be done on your own or by hiring a third-party company. In either case, you should be aware of your rights. One of the first steps in credit restoration is reviewing your credit report. You can request a copy of your credit report for free once a year from each of the three credit reporting agencies.

Cost of credit repair

The cost of credit repair can vary greatly, and it is best to check with several companies before making your final decision. The cost of a credit repair service will depend on the number of errors on your credit report, and the type of service you need. It is best to choose a service that has reasonable rates. Credit repair agencies usually charge monthly fees, plus a one-time setup fee. The setup fee can range anywhere from $50 to $150, depending on the company. The first work fee is usually equal to the monthly fee, and it will be due between five and 15 days after the company starts the services.

Legality of credit repair

Consumers who are facing credit repair issues should always check the legality of credit repair companies before hiring them. The federal Truth in Lending Act requires credit repair companies to disclose certain information before accepting a customer. In other words, you should always ask whether your credit repair company is legally allowed to charge you before it starts working on your credit. A company that charges upfront may be breaking the law.

Impact of credit inquiries on credit report

The impact of credit inquiries on your credit report depends on the kind of inquiry. A hard inquiry lowers your credit score, and it remains on your report for two to three years. Additionally, hard inquiries make you appear to be a higher risk to lenders. That can lead to higher interest rates.

Time commitment of credit repair

It’s possible to repair your credit on your own, but it takes time. The process of repairing your credit may take months, and even years. The time commitment varies depending on your credit score and financial situation. In general, the fewer mistakes you have to report, the faster your results will be. Under the Fair Credit Reporting Act, credit bureaus are required to remove any discrepancies on your report within 30 days.

 

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