The Truth About Credit Repair

Promotions such as – We Can Repair Your Credit – are everywhere. They imply that all you need to do is hire a service to get negative items wiped off your credit history and your credit score will instantly improve. The reality is that consumers often pay a lot of money and their score does not improve in any significant way.

It is true that a consumer has several options to deal with debt and build a good credit history. These include DIY, debt management plans, debt settlement, and bankruptcy. The best option depends on a person’s specific situation.

Each option comes with different side effects. DIY may have the least side effects, but is only feasible for people who have enough income to cover living expenses & debt repayment. Debt settlement may have tax consequences. Bankruptcy can have longer lasting side effects, but for some people it is the best option to get back on track.

Removing negative credit items will not instantly lead to high credit score. A history of paying debts as agreed is necessary for a high credit score. So after dealing with negative debt, a consumer will need to use credit effectively to build a good history. Unfortunately, many consumers pay for expensive loans with a goal of building credit. Often the fees and interest are so high that they consume a large portion of income.

The truth is many consumers can build or rebuild a credit history. The first step is to analyze your specific situation, understand your options, and make an action plan.

If you need help making a plan consider working with a Florida Master Money Mentor. The mentors provide free 1-1 educational help and guidance. They cannot provide legal or investment advice, nor do they sell or endorse financial products. They can provide guidance in developing a plan to achieve financial goals such as building credit, debt repayment, or developing a savings plan. For more information about how to connect with Florida Master Money Mentor in Hillsborough County contact Lisa Leslie lmleslie@ufl.edu or 813-744-5519 ext.54143.

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