Consumers have the right to dispute mistakes on their credit reports. But if they've made late payments, that can't be erased, consumer experts say.
The settlement is the latest salvo in the bureau's crackdown on credit repair outfits. Rohit Chopra, director of Credit Repair Companies, said: ''Credit repair companies'' are a scam. The Federal Trade Commission has also taken action against them recently. As delinquencies on credit card debt have risen to prepandemic levels, the National Foundation for Credit Counseling has seen a'steady increase' in demand for credit counseling services since the spring of 2022, said Bruce McClary, a spokesman for the foundation. According to reports from its member agencies, both counseling activity and enrollment in debt management plans have returned to pre-existemic levels, he said. The three major credit bureaus - Equifax, Experian and TransUnion - compile details about your payment history into credit reports. Banks, lenders, and other firms use the reports to determine if you're a good credit risk. That shows up on your reports and hurts your credit score, a three-digit summary of your credit record, making it harder to get new loans at favorable rates. If you're having difficulties repaying debt and your credit is suffering, one option is to seek advice from a non-profit consumer credit counseling agency, Pizor said. If you qualify, such groups can assess your financial situation and arrange a debt management plan, which will let you pay off your debts over time, typically in three to five years. Some agencies may charge a fee, which is offset by a lower interest rate negotiated by the agency. Researchers said that borrowers who took advantage of payment pauses from their credit card companies during the pandemic and then enrolled in nonprofit debt management plans were significantly less likely to default than similar borrowers who did not participate in such plans.
He added that consumers should be skeptical of debt'settlement' companies because they typically encourage consumers to stop paying their lenders. Borrowers then send the money to the settlement company, hoping to push the lender into settling by accepting less money than is owed. But if the effort isn't successful, customers can end up with poorer credit than when they started, Silberman said. '' ve dug a deep hole'', he said. If a credit counseling firm doesn't think you can pay off your debts within a reasonable amount of time, personal bankruptcy may be an option, as it can be a legal procedure for getting relief from debts you can't pay. However, it may be difficult to gain credit for years afterward because it may be difficult to access it. The National Foundation for Credit Counseling offers some questions and answers about managing debt. The Justice Department has approved a list of agencies that are approved to provide pre-bankruptcy counseling. Other services, such as credit counseling and debt management plans, can be provided to these groups. What credit cards can boost my credit? Certain banks and credit unions offer secured credit cards, which enable users to make a refundable cash deposit - usually a few hundred dollars - that serves as a collateral for purchases made with the card. Cardholders can eventually build a repayment record that improves their credit score, allowing them to advance to a traditional card with a higher borrowing limit. Also, Amazon and Discover are among those offering secured cards.