Many people don’t realize how important credit is until they try and make a major life purchase like a car.
Why does credit matter in these situations?
When applying for a car loan, your credit can determine the interest you have to pay back to the lender. In the worst case scenario, if you have bad credit for a car loan in Kitchener, you risk getting rejected from lenders and lose out on potential financing.
Bad credit can have a negative impact on your life. For some, the situation can become so overwhelming that they seek professional assistance to help them improve it. That’s when a credit repair company can come in. But before we decode exactly what credit repair companies do and how they help bad credit car loans in Kitchener, we’ll give you a quick rundown of what credit repair is.
What Is Credit Repair?
Credit repair is when you take direct action towards improving your credit score. Bad credit is typically a result of negative events in your credit history including missed or late payments, too many credit inquiries or bankruptcy.
Bad credit starts to affect your life when you start looking to make major purchases like a car or home. For big buys like these, people tend to look at various forms of financing. One of the key components to getting loan approval of any kind is getting your credit score looked at by lenders and when it’s too low, it’s starts to raise eyebrows. Lenders tend to question your level of financial responsibility and in the worst case scenario, reject your application entirely if they don’t believe you’ll be able to make monthly payments.
Bad credit can be a major impediment in your life which is why credit should always be monitored as it could deeply affect your future buying power. If you’ve been struggling with bad credit for a long time, seeking credit repair is often recommended. This can be done by yourself or with the help of a third party, like a credit repair company.
Now that you know what credit repair is, we can talk about credit repair companies. What are they and what do they do? Read on to find out!
When Do I Need To Go To A Credit Repair Company?
For many reasons, having bad credit can be very stressful, especially when you’re actively trying to apply for car loans in Kitchener. If you’ve been constantly denied financing from lenders in the past, your next move might be to look at alternative solutions to help get your credit in the green again. If this is the current situation you find yourself in, now might be a good time to consider a credit repair company.
Now before you take that leap, be aware that credit repair companies aren’t for everyone. People only qualify if their bad credit stems from errors or inaccuracies in their credit statements, which need to be corrected. If your bad credit is a result of being unable to make payments on time, you’re better off seeking other forms of credit assistance.
Pro Tip: Try And Repair Your Credit On Your Own First
Before seeking an alternative route with a credit repair company, always try and repair your credit on your own first. While the thought maybe intimidating to many, it’s actually not that hard to do. All you have to do is give yourself time and make sure you do your research. Look at your current credit situation and hone in what needs improving and work from there. There are countless of great resources and tips online to help repair your credit that you should refer to regardless. Most importantly, doing it yourself can save you from spending too much money. A lot of what these third parties do can be done yourself if you give yourself the patience and time to try it.
What Does a Credit Repair Company Do?
A credit repair company’s main focus is to dispute credit issues with credit bureaus. When they first start working with you, they immediately pull your credit report from all major credit bureaus. Once that’s received, they look through your report to identify errors that may be affecting your credit score. They can identify negative entries on your file that aren’t supposed to be there, and contact the credit provider to have them remove it.
In addition to disputing negative items, credit repair companies are known to identify any inaccurate information on your report, send cease and desist letters to the collectors and thoroughly go over your credit reports from TransUnion Canada and Equifax Canada and make sure they’re correct. The more they’re able to clean things up, the more your credit score improves.
So what’s the real benefit of working with a credit repair company?
You’re paying for their experience and overall efficiency at filing disputes with credit bureaus, a task many people find too daunting to tackle on their own. Their experience at negotiating with lenders can expedite the process and help you see results to your credit score a lot quicker.
How Much Does A Credit Repair Company Cost?
The cost of credit repair services will vary from company to company and what they’ve promised you. On average, services can cost upwards of $100 a month which can quickly add up if there are other service fees associated with them.
Are There Alternatives To Credit Repair Companies?
Some people believe that going to a credit repair company will be the answer to their bad credit prayers, but that’s simply not the case. In fact, it may only be a short term solution to some of the bigger credit and financial issues you’re facing. To help get your credit score in shape, here are other options to consider besides credit repair companies:
For those that need more guidance in terms of how to manage their finances, how to build and repair credit and budget their money — there’s a number of counselling groups that can help you get well informed and give you the tools you need to be in the best financial and credit standing possible.
Counselling can come in various forms including one-on-ones with a case worker, group sessions, as well as seminar and panel events. The best part about counselling is depending on where you go, it can be free or come at a much lower cost.
Debt Management Programs
If you’re seeking credit counselling, an extension of their offerings typically include debt management as well. It’s not uncommon to see those suffering from bad credit to also have major debt. If this sounds like you, a debt management program might be exactly what you need to get yourself back on track.
The way it works is instead of paying directly to creditors, you’ll be making payments to the credit counselling organization instead, who will then pay to lenders on your behalf. This can be really helpful as your payments will consistently remain the same. In some cases, your case worker may even be able to knock down some of your interest rates.
It’s important to keep in mind that debt management programs are no quick fix. In fact, they typically last anywhere between 3 and 5 years. Within that time, you won’t be able to take on any more debt until you’ve paid everything back and no longer part of the program.
What Should I Consider Before Going WIth A Credit Repair Company?
Not Everyone Is Eligible
As we mentioned earlier, a credit repair company’s main specialty is claiming disputes on your behalf and correcting any inaccuracies that they may find in your report that may be affecting your credit rating.
If you’re not making payments on time or continue to accumulate debt, going to a credit repair company might not be the best option for you. If you fall into this category, you’re much better off doing research to figure out how to manage those finances and debt on your own or seek credit or debt counselling.
Make Sure They’re A Reputable Credit Repair Company
Unfortunately, there are a lot of bad credit repair companies out there looking to make a quick buck, and take advantage of your vulnerable situation. Always be wary of companies that promise to improve your credit in short time frames because most often than not, it’s completely unrealistic.
Before you sign up with any credit repair company, make sure to ask if they’re a licensed and accredited business. If they don’t seem transparent with their business practices or their offer seems too good to be true, it probably is and best to move on.
Here are some common red flags to be aware of when looking into credit repair companies:
- Money Upfront – Legitimate credit repair companies will not ask you for money upfront before they start working with you.
- False Information – Reputable companies will never ask you to falsify your information while applying for additional loans to other services. This is a surefire way to help dig yourself into a bigger financial rut.
- Dispute Accurate Information – If a credit repair company advises you to dispute accurate information that you’ve presented, that’s a red flag and you should get out of there as soon as possible.
If any credit repair business seems a little iffy to you, it’s always best to trust your gut and move on. If you’re unsure, it’s a good idea to check the Better Business Bureau and check out the reviews people have left on them in the past.
Your Credit Won’t Repair Overnight
The road to credit repair can be a long one sometimes, even with the assistance of a credit repair company. It can take up to 30 days for a credit bureau to assess a dispute and verify a claim. Depending on how many claims you’re disputing, they can take up to six months to get everything straightened out.
You Have Other Options
A great way to repairing bad credit is actually taking out car loan. If you’re worried about being rejected, it’s important to note that there are other lenders out there like KitchenerBadCreditCarLoans.ca that actually specialise in getting all types of applicants approved with some of their most trusted financial partners.
Once striking a deal with an interest rate that works for you and your budget, making your monthly payments will help your credit score improve significantly over the course of a couple months to a year. Even with bad credit car loans, we can help you get out of your credit rut!