A low credit score can cause numerous headaches and can have some pretty serious knock-on consequences for your financial health and wellbeing. For example, a low credit score means that you will have to pay higher interest rates on your credit card balances. This makes your everyday spending more expensive and ends up costing you money in the long run. (Source: Pyramid Credit Repair)
People with a low credit score will also often have to pay higher security deposits when they sign up for utilities. For example, phone companies will check customers’ credit scores before making them an offer. Customers with a low credit score will have to pay more upfront, although these deposits can often be recovered if you manage to keep up with all your payments.
Of course, the other side of the coin is that people with a good credit score can enjoy lower security deposits and better interest rates on their credit cards. Many people with a poor credit score feel obligated to spend in cash so they can avoid paying that extra interest. Repairing your credit score could, therefore, enable you to start spending money on credit cards again, instead of having to rely on cash, something which is becoming increasingly difficult during the coronavirus pandemic.
The Do It Yourself Approach
The cheapest way of repairing your credit score is naturally going to be to do it all yourself. Of course, this also comes with a couple of caveats. First and foremost, if you are going to successfully repair your credit score, you need to know just what to do. If you play your cards right then you can potentially repair your credit score on your own without having to spend a penny. In some cases, you might have to spend some of your own money in the process, but you should be able to keep the price below the $30 mark if you approach your credit repair in the right way.
The best place to start with repairing your own credit score is with the disputes portal that each credit bureau provides to customers. You should request a copy of your credit score, so you can see exactly why your score is the way it is. If you notice any discrepancies in your report or glaring errors and omissions, the disputes portal should be your first port of call for fixing the records.
In some cases, you will have to escalate your disputes and provide some kind of documentation to back them up. If this is the case, then you should be prepared to spend a little bit on mailing costs, so you can send any important documents via recorded delivery and with a return receipt request.
Using Credit Repair Software
Doing everything manually might be cheaper, but it is also time-consuming and difficult if you haven’t done it before. Using credit repair software provides a happy middle ground between doing everything yourself and paying someone else to handle the entire thing for you, which we will come onto shortly. The repair software will enable you to submit disputes on your own, but how sophisticated and easy to use it is will depend on what you are willing to spend.
The most basic credit repair software out there only comes with the most fundamental features. If you want something that is going to automate significant parts of the process for you and remove as much of the effort as possible, then you will need to be prepared to spend a couple of hundred dollars on the right piece of software. However, once you factor in all of the disadvantages we mentioned above, and the impact that these can have on your finances, a couple of hundred dollars for a piece of software to fix your credit score might be a worthwhile expenditure.
Most people don’t need the full suite of tools that come with the most high-end credit repair software and will be perfectly fine settling for something in the mid-range. Many of these mid-range options are available on a subscription basis starting at around $15 per month. One of the advantages of using a subscription-based service is that you can often scale up the package that you choose. In other words, you can pay for the base product and then add on smaller charges for additional features that you require.
If your credit report is relatively easy to repair, then you can often get away with only paying for a month or two while you repair your report. The total cost of this option ranges from $13.99 per month up to around $400 as a lump sum.
Concierge Credit Repair Services
The most expensive but most reliable option is going to be using concierge credit repair services. These are individuals that you can pay to fix your credit score for you. They will handle every part of the process, leaving you free to sit back and wait for the results.
The people that staff these concierge services will be licensed attorneys. Because they are licensed attorneys, you can give them permission to pull your credit reports and analyze them on your behalf. Once they have reviewed your reports and identified any issues, they will then inform you of what they are and what steps are going to be taken to repair your credit report.
Whether you pay a single lump sum to these businesses or you engage their services on a subscription basis will vary between providers. In either case, this is going to be the most costly option available to you. The initial setup fees for engaging these services can e anywhere from $15-$90. After this, there will be subscription charges of up to $100 per month.
Repairing your credit report can be ane expensive process, but it doesn’t have to be. When you consider how much you could save just by having a better credit score, the costs involved are often more than worth it. It is always worth trying to do it yourself first, especially as you can do so for free. However, if you do need help, there are plenty of people you can turn to.
Image Source: BigStock.com (Licensed)