How Much Will Credit Recovery Services Improve Ratings?

Many people have fallen behind on payments and are seeking the assistance of credit recovery services to help them gain control of their finances and improve their personal credit situation. There are a variety of services that are available and how much any of these types of services can help you improve your credit rating will depend on many factors and variables. Therefore, here is a list of some of the ways different types of credit recovery services may be able to help you.

Consumer Credit Counseling Services

Consumer credit counseling services generally provide counseling in order to help you create budgets and manage your finances; furthermore, they may be able to help you consolidate payments and lower the amount of your monthly expenses by combining all of your unsecured loans and credit card debt into a single payment. While these types of services are very useful to the consumer, they generally do not do a lot to help you improve your credit rating; moreover, these types of services are usually a last ditch effort to get your finances under control and avoid bankruptcy. However, if these credit counseling services cannot help you, they may indeed advise you to consider bankruptcy as an option.

Credit Consolidation Companies

Credit consolidation loan companies often help consumers by providing debt consolidation loans that allow consumers to combine several types of debt into a single payment. Once you're approved for a debt consolidation loan, the lender will generally pay off credit card balances and other outstanding unsecured loans.

However, many of these lenders will in fact require that you close your credit card accounts and that you do not apply for new unsecured debt until the consolidation loan is paid off. The way a consolidation loan will affect your credit rating will depend on when you take out a loan and if you are past due or not on outstanding credit card or unsecured loan balances at the time. Therefore, there are times when the consolidation loan may help your credit rating a great deal or not really improve your credit rating very much at all.

Credit Consulting Services

Credit consulting services offer services designed to help you improve your personal credit score and rating. These types of services will generally help you analyze your personal credit reports and locate any discrepancies or errors that need to be removed. Furthermore, these types of services will also help you identify unauthorized inquiries into your credit profile.

By helping you remove inaccurate information and unauthorized inquiries from your credit reports, your credit rating and score can improve. However, you should be aware of companies that advise you that legitimate negative entries can be legally removed or if the company advises you to attempt to change your Social Security number or use an employer identification number in lieu of Social Security number. This type of activity is highly illegal and could wind up costing you a lot of money and costly fines and penalties later on.

Furthermore, you should be aware that most of the services offered by these credit consulting services are things that you can do by yourself. Therefore, you should request copies of your personal credit report from the three major credit reporting agencies: Equifax, Experian and Trans Union. Once you have your credit reports, you should review them carefully and make sure the accurate contained in them is accurate. If there are errors or discrepancies, you can have them removed by yourself by simply providing documentation or writing a letter to the credit reporting agency asking that the debts be verified.  If the debts cannot be verified they will usually be removed by the credit reporting agency.