Do Credit Repair Agencies Have a Useful Role

The Best Debt Advice is From Free and Independent Sources

Feb 27, 2009

For those with a poor credit score, consulting a credit repair agency may be tempting but there is nothing the agencies can do, that they can't do themselves.

Credit repair agencies are in business to make money by charging for a service that can be obtained free of charge. They may also be in business to sell debt consolidation products that could be unsuitable, unnecessary and expensive.

Credit Repair Agencies

The UK Insolvency Helpline an independent and impartial debt advice service states quite clearly that people should not use a credit repair agency. They say: “They often use many illegal methods that will make things worse for you. Be wary especially of agencies that tell you they can remove County Court Judgements (CCJs), this is not possible. It is better you handle your credit problems yourself, because only you can do a good job of repairing your credit.”

Credit Report

The first step for anyone trying to ‘repair’ their credit score is to obtain a copy of their credit report and check for inaccurate entries. There are three main credit reference agencies in the UK: Experian, Equifax and Callcredit, all will supply a copy of a credit report for just £2.

Credit Reference Agency

If a person believes that there are inaccuracies on their credit report they should write to the credit reference agency and ask for it to be removed. If the agency recognises that there is a mistake on the report they will remove it. However that will not always be the case. If this happens everyone is entitled to add a “Notice of Correction”, in essence a short explanation of the circumstances behind an adverse entry on the report.

It may quite simply be a note that redundancy or illness meant that some payments were missed but since then things have improved. Companies will read this information but do not have to react to it. In the UK information can stay ‘on-file’ for 1-6 years.

So if all the entries on the report are accurate, what other ways are there of improving a credit score? Perhaps the most important yet least understood is that multiple credit applications will have a detrimental affect on a credit score; the more applications that are made, particularly in a short period of time, the more it will affect a score.

On credit cards try to pay more than the minimum payment every month, minimum payments can take years to repay a debt, the lenders love a person who does this because it earns them vast amounts of interest but credit scorers do not.

The credit reference agencies will also offer valuable information on their websites.

For more information and free impartial advice a person seeking help should contact the Consumer Credit Counselling Service (CCCS) or the National Debt Helpline.

There is also a useful free booklet from the UK Information Commissioner’s Office called Credit Explained.

This information is obtained from the reputable sources listed below but is not offered as financial advice.

The copyright of the article Do Credit Repair Agencies Have a Useful Role in Personal Debt Management is owned by Neil Gunn. Permission to republish Do Credit Repair Agencies Have a Useful Role in print or online must be granted by the author in writing.