If you are recovering from some credit bumps and bruises, there is no shortage of people and groups who offer to help repair your credit for you. It may be tempting to put yourself into their care and have them develop a solution for you, but they are generally unnecessary and might actually be counterproductive. Before you decide to work with a credit repair specialist, make sure that you really need their services.
There is almost nothing that a credit repair service can offer you that you cannot do yourself. The types of services they offer include counseling, contacting creditors on your behalf, and budgeting for your payments on debts. You can accomplish all of these yourself at no charge.
Counseling is about taking an honest look at your credit and budget situation and applying some basic rules. At its heart, counseling is about knowledge. But there are no secrets when it comes to budgeting and credit. With the availability of information on the internet, you can learn as much about credit and personal finance as you would ever want to learn, all from the comfort of your home. Most of the legitimate state agencies that provide consumer counseling now make their materials available by the internet. Instead of being a passive recipient of knowledge in the form of counseling, take charge of your financial future and seek out knowledge to become a more informed consumer.
Credit repair services will often offer to contact lenders “so you don’t have to.” But you are perfectly capable of contacting your creditors and working with them to develop a payment plan. It might be a bit painful, but you will recover. And every time that you feel frustrated or embarrassed, take that moment and commit that you will remember it and never allow it to happen again. In many cases, your creditors would rather work with you anyway. The credit repair agency is only speaking to them as your representative, they have no ability to negotiate a better payment plan. In some cases, the repair agencies will hurt you in the eyes of the lenders: if they tell the lender that you are going to dispute the debt, the creditor will likely report that to the credit agencies, putting you in a worse situation than you started.
Finally, some credit repair services claim that they will do your budgeting for you. You send them a single check (or more likely, you give them permission to debit your account on payday) and they divide the payment to pay all of your delinquent bills on time. But this misses the point: by asking them to do this you are not developing the kind of spending and budgeting habits that you need in order to avoid the same credit trap later in life. By forcing yourself to pay your bills on time, you are reminded of where you stand, you re-learn how to make your monthly payments by taking personal responsibility and you develop strong budgeting skills.
If you are struggling with debt, the solution is found in gaining knowledge of financial planning and taking responsibility for your own life. You can outsource that to a debt specialist, but in some cases you only make yourself worse off. There is nothing that a debt relief specialist can do that you yourself cannot accomplish as well. There is no need to spend money on a debt agency, and plenty of reasons why learning to do the same things yourself will make you stronger financially in the years ahead.