When Is the Right Time for Credit Repair?
If you have bad credit, it seems like just about everybody under the sun wants to help you out. Debt relief companieswant to help you improve your financial situation by reducing your total monthly payments to a manageable level (ironically, often at the expense of your credit score). Car dealerships want to get you into a new car as a means to help rebuild credit ("No credit, no problem!"). Credit repair companies want to get you enrolled in their program so they can work on removing negative items from your credit reports.All of these entities are providing very different services, so, as one would imagine, each of these services are not right for everyone.
Debt relief programs such as debt counseling, debt consolidation, and debt settlement are designed to help people deal with out of control bills which is certainly a cause of bad credit, but not everyone looking to improve their credit score is behind on their payments.
Bad credit financing can be an excellent tool for rebuilding one's credit score providing that they make payments on time, but taking on more debt isn't a good idea for many people with bad credit. In addition, bad credit loans can cost significantly more than traditional loans which is an expense many people don't want to take on - especially if their bad credit score is not a result of irresponsible spending and is instead a product of errors in their credit reports.
Of the three options, credit repair is the most focused on making an impact on your credit score. A well rounded credit repair effort is one that includes credit disputes designed to remove damaging information from your credit reports as well as account management and budgeting designed to promote the positive aspects of a credit profile. That said, credit repair in the sense of cleaning up your credit reports is also not something that is appropriate for everyone with a less than desirable credit score.
Bad credit usually follows a pattern. First you are living life as normal, paying your bills on time, and generally following the path of a responsible consumer. Then something happens that upsets the balance. Maybe you lose your job, have a serious illness in the family, go through a divorce, or have some other life altering event. Your income no longer meets your expenses and/or reporting errors cause things to start showing up on your credit reports that should not be there. Your credit score starts to slide which makes matters worse. Credit card companies start charging higher interest rates, you get denied loans, and the whole thing snowballs on you.
At this point, credit repair cannot do much for you. It does little good to try removing negative items from your credit reports if they are just going to be replaced. While your finances are still reeling, you would be better off reaching out to a debt specialist.
Once you have weathered the storm, however, credit repair can be a godsend. After successfully enduring a financial catastrophe, you may be back on top of your obligations, but the damage to your credit will endure for years resulting in higher interest rates, decreased chances of getting hired for a new job, and even difficulty finding a place to live.
This is the time to look into credit repair and credit repair companies. After the damage has been done, the cleanup can begin.