Repairing your credit after bankruptcy can be time-consuming. It’s a drain not only on your wallet but your time and energy. If you’re climbing out of a bankruptcy, you’ll need patience and determination to do it right.
That’s where a credit repair company can be invaluable.
Before your bankruptcy, you’ve probably gotten offers from companies to “fix your bad credit” in your mail or email or heard about them from television or radio commercials. And now that you’ve filed for bankruptcy, you’ve probably been seeing these ads more than ever.
Reading the tips and reviews below will show you the easy steps and quick moves to make in order to leverage a good credit repair company to your advantage. While not every company is created equal, there are competent firms with years of experience lowering debts and raising credit scores these days.
How Your Credit Rebuilds After Bankruptcy
There are a few easy steps to take when you have bad credit and need to rebuild it.
Taking out a secured credit card after bankruptcy, taking out secured loans (or an auto loan after bankruptcy), and becoming a co-signer on property are all great ways to get your credit back in robust standing. It’s a sign you’re on the road to personal financial health again. And it can ultimately lead to you being able to buy a house after bankruptcy.
Related: See our picks fro the best credit cards after bankruptcy.
But what happens when there’s an error on your credit report? What happens when your credit card company doesn’t report your payments to the credit bureaus accurately? What happens if you’re getting penalized for late payments on a loan you’ve never even heard of?
Mistakes like this happen every day.
And if it happens to you, you can expect to deal directly with the three credit bureaus (usually each of them separately) to resolve it. This can take weeks, even months. By law, the credit bureaus are obligated to respond to any inquiry within 30 days… unless they find your claim to be “frivolous,” in which case they’re at their own discretion. You can guess how some of those cases turn out.
For someone digging out of a bankruptcy, navigating a labyrinth of various customer service centers and blocks of dense financial text can be a nightmare. And to anyone who isn’t great at numbers, it can get confusing, overwhelming and yes, even scary at times.
That’s when credit repair companies can help.
What Exactly Do Credit Repair Companies Do?
One of the most important numbers you should keep in your head when restoring your credit is your credit score. That one number can dictate everything from what credit card is in your wallet to what car you drive to where you sleep at night… and in the messy aftermath of a bankruptcy, it’s probably been tossed in the ringer.
Depending on which chapter of bankruptcy you filed, you may have to wait a few months after the case was discharged by the court before the three credit bureaus (Equifax, Experian, and TransUnion) have time to update your credit report. Once they do, visit AnnualCreditReport.com for your free annual copy.
Your credit report and credit score are two separate things. Your credit report will show your history of borrowing and paying off debt. It does not show your credit score, but the information on your report is used to get your credit score. Lenders like banks and credit unions will look at both your report and score.
In short, if there’s a mistake in your credit report, it can have a trickle-down effect and wreak havoc on your credit score.
For example, let’s say you find the perfect car after months of searching, and last month when you checked your credit score you found it’s good enough to qualify for an auto loan through your credit union. Since that time, however, and unbeknownst to you, your secured credit card company made a mistake in reporting to the credit bureaus and your credit score took a major (mistaken) hit.
You’re denied the loan, somebody else drives off with your car, and you get to spend the next few days on the bus talking to customer service representatives trying to figure out who made the mistake.
This is where credit repair companies can be lifesavers. They study your credit report for any errors and, if they find any, they resolve it with the credit bureaus directly. They know what to look for, know what steps to take in order to fix it, and what their clients are entitled to from both the credit bureaus and lenders.
Credit Repair Companies You Can Trust
Like any professional you hire to do work for you, it’s always in your best interest to research who you’re inviting into your home (or in this case, your finances).
Below are a few credit repair companies that have proven over the years to be effective and reliable. They vary in the services they offer, and there are a few states some of them don’t operate in. That means some of these companies will be a great fit, while others won’t for you specifically. Always do your homework and spend time on the company’s own website to find out as much as you can about the companies and the services they offer.
Ovation Credit Services
Some positives of Ovation Credit Services right off the bat: discounts for married couples, seniors, and military; free consultations; and a no-risk refund policy. They’ve been in business since 2004 and, according to their website, they’ve made an average of 19 improvements per customer. Impressive numbers indeed.
But you get what you pay for, and Ovation is a bit on the high-end. They offer two packages: for their Essentials Plan, it’s $89 upfront and $79 each month after. This includes the cost of a personal case advisor and financial management tools.
Their Essential Plus is $89 upfront and then $109 per month. This includes credit monitoring, unlimited credit dispute letters, and unlimited, bankruptcy letter of explanation, creditor goodwill letters (basically letters of reference to banks).
Sky Blue Credit
With a 90-day money-back guarantee and fair fixed pricing, it’s hard to pass over Sky Blue Credit. They offer one simple credit repair plan, Sky Blue Credit, for $79 upfront and $79 per month. This includes the all-important credit report monitoring, as well as debt validation, cease and desist letters (great if there’s a mistake regarding a repossession on your report), and debt settlement counseling.
Though Sky Blue Credit is not accredited with the Better Business Bureau, they’ve been in business since 1989 and have a 4.7/5 rating on ConsumerAffairs.com.
The Credit People
A company is only as good as its people, and at the Credit People, they only hire Fair Credit Reporting Act Certified credit consultants (as far as certifications for credit repairers go, this is the gold standard). They offer two options on the same plan: a monthly membership of $19 upfront and $79 per month or a flat rate membership of $419 for six months.
However you decide to pay, the plan includes unlimited disputes, access to your credit reports and score, and financial counseling.
Another reason the Credit People stand out is their satisfaction guarantee and their willingness to back it up: flat-rate memberships come with a six-month guarantee and monthly subscribers can cancel anytime and not be charged for the month.
How Do Credit Repair Companies Repair My Credit After Bankruptcy?
When you hire a company to help repair your credit, it’s important not to get unrealistic expectations; after all, they can’t work miracles. They can help speed certain processes up but not because they hold any secret cards, it’s just they know (or should know) the correct channels to get any issues regarding your credit resolved. You hand them the keys, sit back, and let them work.
They do this by regularly requesting and reviewing your credit report from the credit bureaus. Duplicate accounts (or accounts that don’t even belong to you), incorrect inquiries, and inaccurate accounts are all things they see and can fix. In essence, they’ll make sure that all of the things you are doing to recover after bankruptcy are being accurately reported and any errors are being taken care of.
More than just a financial watch-dog working in the background, however, many credit repair companies will sit down with you and devise a financial plan tailored specifically to you.
When they’re reviewing your credit history and other financial information, remember these are trained financial pros. They can also look at ways you can save money (and there are always ways to save money).
Disputing Credit Discrepancies After Bankruptcy
Once a credit repair company finds an error on your credit report, they initiate the credit challenge directly with the credit bureau. As mentioned above, the credit bureaus are legally obligated to respond within 30 days unless they can legally argue it’s a frivolous claim.
And the truth is, they’re much more likely to take credit disputes seriously when they come from a credit repair company (you can imagine how many personal disputes they receive direct). Disputes from a real credit repair company will be organized, address only what they need to and nothing more, and reach the appropriate office.
Disputing charges of any kind is never fun and tends to occupy large blocks of time. And when it comes to disputing something on your credit report, do not hope that someone at the bureau will catch the error. The issue needs to be addressed as soon as possible. The longer you allow an error to remain on your credit report, the more damage it will do.
Hiring a company that handles all of this for you and does so effectively can be a vital part of reemerging from a bankruptcy.
Of course, you can do all of this yourself; plenty of people have done it before and they’ve been successful at it, too. But for someone with a full-time job, a family, and a social life, (or for someone who simply can’t stand red tape) the amount of time and focus needed is often simply unavailable.
Credit Counseling After Bankruptcy
It varies from company to company, but many credit repair outfits also offer credit counseling services.
This goes beyond your credit report and looks over your larger financial picture. They can advise on debt management, develop a budget after bankruptcy, and help you organize a plan to pay down your debts. Some even offer free workshops, a great place to meet people in your same situation and see what’s been working best for them in their own journey.
If your credit repair company does not offer credit counseling – or you just want the counseling without the repair – there are a number of non-profits staffed with trained professionals, such as the Financial Counseling Association of America and the National Foundation for Credit Counseling.
Remember, just because many credit counseling organizations are non-profit, that doesn’t mean they’re free. Ask what services they provide and at what cost. If they’re unwilling to give you basic information like this, it’s a red flag and you should walk away.
Never sign a contract without reading it first and always ask what educational materials they provide for free (booklets, folders, workbooks, etc.). Any organization actually interested in helping you will always provide you with some free information, even if it’s just the details of what’s included in their plans.
How to Know You’ve Picked the Right Credit Repair Company
Once you’ve found a company to help build your credit or a non-profit to give you financial counsel, always check them out online. Almost all reputable companies will have an established online presence these days. If they have one or not, and what kind they do have, can tell you a lot about a company.
A simple Google search will also turn up all kinds of information. Use the links above, read client reviews with a grain of salt, and make the decision that’s right for you.
After all, you’re counting on these people to help restore your credit. By extension, that means restoring your good name (at least in the eyes of creditors). These credit repair companies will get an inside look at your finances; it only makes sense that you research them and make sure you can trust them for yourself.