Is Credit Repair Legal?
For those who are searching for assistance with their less-than-great credit score, credit repair is certainly an option to consider. However, before working with just any company that promises to help improve credit scores and dispute discrepancies on a report, it is important to determine whether or not a particular company is operating within the boundaries of the law. What many individuals with bad credit don't realize is that repairing their credit is legal when it is done within the confines of the law as dictated by the Credit Repair Organizations Act (CROA). This federal act deems what credit reparation companies are permitted and not permitted to do when it comes to fixing credit scores and eliminating debt. Take a look at some of the important stipulations that these companies are required to adhere to by the CROA.
· A clear and detailed contract must first be received by the individual seeking credit repair services prior to any repair company performing services for them. It is typical for these contracts to include a description of services to be performed, payment for these services and time frame for completion.
Repair organizations are never permitted to ask for payment prior to providing service to an individual. Any company that asks for upfront payment for their services should be shied away from, as these could be potential scams.
· Companies should never alter the identity of their users or attempt to illegally alter their credit history. All reparation services should be performed within the confines of the law, never misrepresenting the client or their history.
· Services that are provided to any individual by a credit reparation company can never be misrepresented. This means that the services provided by the company must be those that are discussed with the individual seeking their services, no less.
· Repair companies who attempt to misrepresent or lie about an individual's credit history are breaking the law.
Any individual who is looking to work with a service should first gain some insight into what the Credit Repair Organizations Act explains as the restrictions of the repair companies and the rights of the individual seeking their services. There are a number of credit reparation companies that do exist that are scams, so it is important to be aware of the legal restrictions placed on this type of service. If for at any reason a company is not operating within these specific stipulations the individual should certainly report them to their state attorney general.
What Is a Bad Credit Score? 5 Things You Should Know
There has been plenty of talk about good and bad credit scores in the news lately. It is no secret that there plenty of people who have come to the realization that their credit scores are holding them back. The bad credit score is holding them back from owning a home, going to college or eve buying a car. So what is a bad credit score? The terms have changed quite bit over the last decade or so. What used to be considered good has been bumped down to the fair category making it much more difficult for people to obtain prime interest rates on loans.
Here are 5 things you should know about scores and how to determine what is a bad credit score versus a good score.
· A bad score is somewhat subjective depending on the type of credit a person is applying for. Home loans have some of the strictest credit standards while department store credit cards have fairly lax standards. Home loans will typically consider anything under 640 as a bad score, but that doesn't necessarily mean it is impossible to get a home loan under some programs.
· Credit card companies will often offer credit lines to those with scores ranging in the high 500s and low 600s, but the interest rates will be less than prime. There may be additional fees tacked on as well.
· When talking about what is a bad score, it is important to understand that scores under 500 are considered very bad. People with scores that low will struggle to get unsecured loans or credit lines. However, it isn't the end of the world. It is possible to raise a credit score.
· Unfortunately, it doesn't take much to knock a credit score down. One late payment, bankruptcy, or medical bill sent to collection can reduce a score by double digits. It takes very little time, a matter of months, in fact, for a score to be negatively impacted, but it can take several months, if not years to repair.
· Consumers with scores that fall into the bad credit range will pay close to double the interest rates compared to those with scores above 640. It is very costly to get an auto loan with interest rates that are essentially punitive. Many consumers would be better served to save the cash in a bank and buy what they need outright rather than take out a high-interest loan.
Understanding how scores impact interest rates for loans and credit cards is an important step to rebuilding credit. Before applying for credit, consumer must have a firm understanding about what is a bad credit score. Never make assumptions about whether a score is good or bad until you have the facts. Choose wisely when it comes to applying for new credit. Don't get sucked into cards with steep interest rates that will cost you more money and drive you further into debt, effectively hurting your credit score more than it already is.