What is Credit Restoration?

Credit restoration is a collective term for various strategies designed to repair or restore a damaged credit rating. The origin of the credit issue usually determines the strategy or group of strategies utilized to initiate the process of correcting or updating credit reports, raising a FICO score and in general restoring good credit. This process of restoration can be handled by the individual consumer, or implemented by agencies that specialize in restoring credit worthiness.

There are three basic sets of circumstances where credit restoration may be utilized. The first and most common scenario has to do with the destruction of a credit score due to choices made by the consumer. This would include situations where the debtor willingly refused to make payments on time, defaulting on loans, mortgage agreements, and other debt obligations. Since the consumer directly caused the damage, restoration of a credit score under these circumstances can take a great deal of time and effort.

Engaging in credit restoration is also necessary when the consumer is recovering from unforeseen financial circumstances that reduced or eliminated the ability to honor outstanding debt obligations. Consumers who experience an unanticipated job loss or extended illness would fall into this category. In addition, people who go through a divorce and experience financial reversal as a result would also be included. While the consumer is directly involved in the factors that led to the lower credit rating, he or she did not willingly choose to default on any debt. While the result is similar to that of people who choose to not honor their debts, circumstances of this type are sometimes easier to correct before initiating the credit restoration process.

A third instance where credit restoration is necessary does not involve any direct action or unexpected life situations on the part of the debtor. Identity theft involves the unauthorized use of an individual’s credit and identity. Consumers often become aware their identity is being fraudulently used when unusual items begin to appear on the credit reports of one or more rating agencies. This application of credit restoration can be extremely involved, as it usually puts the burden of proof on the victim to confirm that certain bad debts logged by a rating agency are fraudulent and should be removed.

Because the exact approach for effective credit restoration varies, many people who need to repair their credit will seek professional assistance. While it is possible for an individual to conduct each task associated with cleaning up reports, making arrangements with banks and other lenders, and obtaining credit education in order to prevent a recurrence of the issues leading to the debt problems, these can often be very labor intensive. A professional credit restoration agency can evaluate the current status of the client, identify the origins for the credit problems, and develop a focused approach that will fix as many issues as possible.

It is important to note that credit restoration does not take place overnight. Often, there are a number of tasks associated with correcting, updating, or removing each negative item appearing on a credit report. Reputable agencies who specialize in credit repair will make this clear to the client, and will not promise everything will be handled in a matter of days. However, it is not unusual for credit restoration brokers to prepare a timeline for completion and to keep the client advised of progress with the job.