Should You Hire Credit Repair Services or Do It Yourself?

The answer to whether you should repair your own credit or leave it to one of the many companies that offer credit repair services lies with you, your particular financial situation and the amount of time & patience you are willing to commit to the process. But how do you know whether you're up to the task or if you should leave it to professionals who do this for a living in the first place? Well, below is just a brief list of steps to mull over before you make your decision.

Step 1: Know your limitations

Can you repair your own credit? I'm sure at one time or another you asked very similar questions. Can you do your own taxes? Tile your own bathroom? Perform your own open heart surgery? All right, so I don't expect anyone to be able to do the last one. But hopefully you get an idea of what I'm getting at - credit repair is a service that you pay a professional to do because you may not have the time, or you just want to make sure that it gets done properly.

Proper credit repair usually entails writing letters to all three of the credit bureaus, writing letters to collection agencies and lawyers, calling collectors to negotiate debt payments, keeping very detailed records of all pertinent correspondence, and of course, waiting. It is entirely possible to repair your credit yourself. The less derogatory information on your credit reports, the easier it is likely to be.

Step 2: Know where to start

Whether you decide to repair your own credit or hire someone, the starting point is the same: gathering the paperwork for every financial transaction you've done over the past ten years. Generally this means ordering your credit reports from the three credit reporting agencies - Equifax, Experian and TransUnion. Though it will likely require some digging through your own files to verify or renounce the validity of the information on these reports.

Step 3: Know the obstacles you face

The first obstacle is ordering, receiving and deciphering your credit reports. While not impossible to read, they are full of abbreviations and codes, so it may take a little research and some getting used to before you're completely comfortable reading them. Additionally, all three bureaus report formats are slightly different and are likely have different information, so be prepared verify accounts against your own records.

The overall timeframe tends to make things a little more frustrating than necessary. The credit reporting agencies have 30 days to examine disputes and will not investigate any more than 5 at a time. Often you may need to dispute an account more than once to get the proper result. Using snail mail the process generally turns into a 45-day turnaround period; indicating that if you dispute just twice, you're looking at 3 months time. Now factor in the time spent on the phone with collection agencies and debt collectors to try and negotiate debt that you've accumulated, and time spent documenting every correspondence you've had with all of these organizations, and it starts to add up.

Step 4: Know the laws in your state

The Statute of Limitations is different in every state, so certainly learn the laws specific to your state. Also understanding the Fair Credit Reporting Act (FCRA) thoroughly should be on your agenda if you decide to repair your own credit.

Understand that whether you do it yourself or hire help that you should only be disputing accounts that you believe are somehow incorrect or are not yours at all. Beware of a credit repair company that wants to dispute everything or promises deletions; you should expect to pay debts that are actually yours and are not past the Statute of Limitations. Just to reiterate: if a debt is actually yours, be prepared to pay it. Neither you, nor any company with a magic wand can make an accurate account disappear.

Step 5: Know how to boost your score

Simply deleting derogatory items & paying off some debt isn't going to turn your score around. You need to exhibit to lenders that you are responsible with credit. This is determined by how long you've had good credit, the number & type of revolving accounts that you have and their balances, and your payment history, among other factors. Many consumers have items deleted from their credit reports only to see their score go down. While the credit score formula may be guarded closer than the colonel's original recipe, credit repair services generally have an idea of what it's going to take to get you moving in the right direction.

Again, it is entirely possible to save money and handle your credit repair yourself, however you need to assess whether this is an undertaking for you. Each individual is different, as is their financial situation & credit profile. Quickly running through these steps should give you a better idea as to what your next step should be. A little hint ... Step 6: Get started today!