Credit Restoration: What You Need to Know

If you are looking to purchase or refinance a home, or apply for any type of credit, you may be having some challenges.

This could be due to items that are on your credit report.

Some type of credit repair, or restoration as it is sometimes called, may offer some benefit, depending on your situation.

Credit restoration is for people who should be able to qualify for a mortgage from both an income and asset perspective, but who have items on their credit reports that prevent that from happening.

It could be due to a medical situation.

It could also be due to a change in employment status.

When creditors place anything derogatory on your credit report, including late payments and collections, they are required to abide by the federal Fair Credit Reporting Act (FCRA).

The FCRA dictates how items are placed on a report.

The FCRA also dictates how you can dispute them.

A credit restoration agency will file paperwork with the creditors on your behalf.

The paperwork lets the creditors know they are out of compliance with the FCRA and that you would like to have the items removed. The job of the restoration company is to walk you through the entire process.

Your obligation to repay these items is a separate matter, though, from the items that appear on your credit report.

In searching for a credit restoration company, find out how long they have been in business and ask if the company is part of any trade associations that require high ethical standards.

Expect to pay a fee of $400 to $500 for the restoration work. You’ll also have to wait 45 to 90 days for your credit to be repaired, depending on what needs to be done.