What are the Different Types of Credit Repair Programs?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 February 2020
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Credit repair programs seem to be everywhere today. Advertisements for various programs are seen on television, the Internet and even via media like print publications and radio. Each of these programs make different claims about how to go about managing the process of credit repair, with some of them focusing on debt retirement as a means of improving credit and others promising to provide access to little-known strategies that will clear up bad credit ratings in a jiffy. All types of credit repair programs should be evaluated very closely before making a commitment to any one program.

One of the more common types of credit repair programs are those that include credit counseling and debt negotiations as a means of reducing debt and beginning to repair credit. With these types of programs, the goal is for a mediator to help you develop a workable budget, then negotiate reduced payments with your creditors. Often, the goal is also to stop additional accumulation of interest charges on those accounts, making it possible to retire the debt faster. The down side is that some creditors may not work with the mediator, and some may also report the activity to the credit reporting agencies, adding notes that may not help your credit rating in the short-term. While this approach can and does often allow consumers to retire debt, the positive impact on credit ratings is sometimes questionable.


Another approach to credit repair programs is aimed more at people who have undergone financial distress and managed to pay off old debts, but suffered a loss in credit rating in the interim. Here, the goal of the credit repair program is to clean up any outdated information on the credit reports, plus establish new credit references that are positive. With this type of credit rebuilding program, the consumer may be provided with step-by-step instructions in how to contact credit bureaus and past creditors to update and correct information on credit reports. At the same time, the program helps the consumer to secure a credit card or loan from a high-risk lender. Typically, the credit line on the card is somewhat low, but enough to allow the consumer to make purchases and tender payments that result in positive reports to the credit bureaus. Over time, this type of activity helps to balance the older negative reports and helps the credit rating to begin climbing once more.

Many credit repair programs come with different resources that help consumers create a plan of action that is ideal for their needs. Along with access to financial advisors, the program may include real or virtual attendance at some type of credit repair course, access to credit repair software that aids in implementing the overall plan, and even periodic checks to make sure the plan is progressing at an acceptable rate. Truly reputable credit repair programs do not promise results overnight; rather, they make it clear the process of restoring good credit takes time and diligence and seeks to provide consumers with the tools to accomplish the task.

There are advertisements for credit repair programs that promise significant improvements in credit ratings in extremely short periods of time and with very little effort on the part of consumers. Programs of this type should be scrutinized closely and compared with other programs to get an idea of just how valid those claims happen to be. Doing so can help individuals avoid wasting time and money on credit repair programs that do not provide those overnight results, and focus on a program that really does help improve credit in a timely manner.



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