Are Credit Repair Companies Legitimate? Are They Worth It To Help Rebuild Credit?

Automotive Finance, Credit Education

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Your credit score is incredibly important when it comes to getting large loans for homes, cars, and any other purpose – so if you have bad credit in Canada and you need a car, you may be wondering how you can boost your credit score quickly.

With a good credit score, you’ll enjoy lower financing rates and better deals on vehicles at most car dealerships – so it’s not surprising that some Canadians turn to “Credit Repair” companies to try to fix their scores quickly, and save money.

But are these companies really legitimate? Are they worth the cost? In this article, we’ll give you the answers. Let’s get started.

Understanding The 2 Types Of “Credit Repair” Services

To understand “Credit Repair”, you need to understand that there are two basic kinds of companies that offer these services.

The first kind is a debt management organization. These types of companies are designed to help consumers control their debt and manage their finances more effectively, and they are perfectly legitimate. But they’re not fast.

These organizations are intended to help you repair credit yourself. They will educate you about how credit works, and help you understand how good financial habits can prevent you from getting back into debt.

If you are in debt, they may be able to start a repayment plan with your creditors, acting as a coordinator between you and credit card companies or collections agencies. This helps you reduce your debt burden somewhat, and can help you lower your interest rates, in some cases.

The process of repairing credit is lengthy, though. It may take 36 months or longer before you see your credit score improve significantly. It’s not a “quick fix”.

The second kind of company doesn’t engage in any kind of debt management – it only focuses on disputing negative items on your credit report. These for-profit companies specialize in disputing negative credit report items. They look for inaccurate, misleading, ambiguous, or incomplete negative items, and work on your behalf to dispute them.

If they are successful at getting negative items removed from your credit report, your score could improve by a fairly reasonable number of points. However, this doesn’t come cheap. You usually have to pay a “start up” fee of between $20-$100, and a fairly expensive monthly fee to use these services.

Recognizing Scammers – What You Need To Know

While legitimate organizations do exist that are intended to help you get out of debt and rebuild your credit score, there are just as many – if not more – illegitimate organizations that are trying to take advantage of your desire for a better credit score. Here are a few tips for recognizing a scam.

  • They promise “perfect credit” or unbelievable results – If a company is promising to help you get a perfect credit score, or raise your credit score by 100 points in just a month or two, chances are that they are not a legitimate company. Rebuilding credit takes a lot of hard work, time, and dedication – and it can’t be done overnight, especially if you’re still in debt.

  • Consider where you heard about the company – Did you hear about the company from an advertisement on a website, or a late-night TV ad – or did you learn about it from a reputable news organization or another such legitimate source?

    If the organization was covered by a reputable source, it’s much more likely to be legitimate. And, conversely, if it’s being advertised with banner ads on websites and late-night ads, it probably isn’t up to par.

  • Your research turns up negative reviews (or no reviews at all) – Most credit repair and debt management companies have a long history of helping their customers, so it will be easy to find reviews on websites like the Better Business Bureau. If you look up a credit repair service and you don’t find any reviews or feedback about their services, walk away. They’re likely scamming you.

Are Credit Repair Services Worth It?

Well, that depends on your situation. Debt organizations can be helpful if you want to get into control of your finances, and disputing negative credit items can help you boost your credit score.

But these services often don’t come cheap. You may be better off taking control of your own finances, without the help of a third-party organization. There is no short-term fix for bad credit.

But if you need a car and you have bad credit in Canada, you may not be able to wait. And that’s okay! At Ride Time, we specialize in helping Canadians with bad credit find reasonably-priced used cars. Shop now, and get the transportation you need in Winnipeg!

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