Why Using a Credit Repair Clinic Might Be a Bad Idea

Don't Let Your Credit Repair Efforts Backfire!

The basic idea behind a credit repair clinic is simple: get your credit "fixed" with little effort on your part. All you do is pay the fees, and they do the rest. Good enough, right?

Not quite.

There are some cases in which using one of these services MIGHT make sense, but these are few and very specific. For example, if you have been a victim of identity theft and you want to remove the negative items from your credit report that are fraudulent, this could be a useful service for you—ESPECIALLY if you can collect damages from the person who committed the ID theft to cover the fees of the credit repair clinic. If ID Theft ruined your perfect 760 credit score, it may not be so simple. Removing the negative items might restore your score some, but in actuality might not completely "repair" the damage that was done by the fraudulent accounts.

The reality is that identity theft isn't the reason that most people need to repair their credit. Most people that need credit repair or "credit restoration" are people who have had some sort of financial problems that have affected their credit. Perhaps they got in over their head with debt and couldn't pay the bills. Perhaps there was a medical emergency that resulted in huge and unmanageable medical bills. Other common causes are lost jobs, divorce, and the death or absence of a spouse (as in the case with military families where the only income-generating person gets sent overseas). In any of these cases, your credit situation is likely complex and very personal. The problem then with credit repair clinics is that their methods of "fixing" your credit are going to be very limited when it comes to having any real impact on your score. The reason for this is that the typical approach consists of using form letters to dispute every derogatory item on your report. If it comes back verified, then you're out of luck. If the bureau sees the "canned" letter and flags your dispute as being one from a credit repair clinic, your results go out the window. It's also possible that removing a negative item could actually HURT your credit store—and again, in this case—you'll be out of luck.

The other problem with credit repair clinics is that they are only doing ONE HALF of the necessary work to repair your credit. What!? That's right, I said ONE HALF. You see, credit repair is actually a two part process. Removing negative items is only one part of that process. The other part involves adding new positive primary accounts to your report—which is something that only you can do.

The fact may be that when it comes to fixing your credit, you are the ONLY person that is truly qualified to fix it. It's your credit score, your credit report, and your problem to fix. The credit repair company still gets paid even if they don't do as good of a job as they should. It isn't "their problem". You are likely to be more careful and do a more thorough job.

Are there actually times that you SHOULDN'T remove a negative item? You bet there are. Never remove a negative item if doing so will hurt your score! The credit repair companies and clinics won't bother to differentiate. The goal of credit repair isn't a perfect credit report. The goal of credit repair is a better credit score. In the end the score is what matters, and it makes absolutely no sense to remove an item, even a negative item, if doing so will hurt your score.

With this in mind, you might want to think twice before purchasing the services of a credit repair company. While it may have some effect, the results that you can get doing it yourself will likely be much better. Weigh your options and consider learning how to do the work yourself. Thought it will take effort, they payoff could potentially be huge, as even a 50 point difference in your score can save you thousands of dollars over your lifetime.

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