As someone who hopes to start up her own business, having good credit is incredibly important. This is because, since your business is very young (potentially not even officially launched yet), it has not yet been able to build up a credit history of its own. So, unless you’re already wealthy and plan on funding everything out of your own pocket, it is your credit history and rating that will determine whether or not you can qualify for the funding and loans you need to get up and running.
Even when you know that your credit is good, this is scary. If you’ve got blemishes on your record or have a bad credit history, it isn’t just scary; it is discouraging. How do you convince a lender to give your company money when your credit report says that you’ve been a disaster at managing your own?
First, let’s stop this spiral before it actually gets started. Having blemishes and problems on your credit report is not the end of the world. Your credit history is fluid and the mistakes you made in the past will not, however much it feels that way now, haunt you forever. It is also worth noting that your credit score and history can be fixed.
If you have the time, fixing your credit is even something that you can do yourself. Here is what you do:
- Get your credit report from each of the three major credit reporting agencies.
- Go through those reports and dispute all of the mistakes you find (yes, all of them. There is no such thing as a mistake that is “too small to report,”).
- Go to all of your open accounts and ask for lower interest rates and better repayment terms.
- Ask them to issue letters to the credit reporting agencies about your good standing.
- Try to negotiate down what you owe so that your debt to income ratio looks better.
- Pay down your debts while building up good credit.
That’s pretty overwhelming isn’t it? In fact, if you’re not careful, fixing your credit could become your full time job for a while. This is why so many people choose to work with credit repair agencies and debt consolidation companies.
Credit Repair: Your Fairy Godmother?
A lot of credit experts will tell you that it is best to do all of your credit repair yourself. They will tell you that working with a credit repair agency or debt consolidator is just one step up from bankruptcy. They will insist that using a credit repair agency will result in a massive black mark on your credit history. They are wrong. For a busy adult–especially one who is working to start her own business–hiring a credit repair agency is the best thing she can do.
For one thing, they are incredible time savers. You hire the agency, pay your fee and then carry on with your life while they do the credit repair work behind the scenes and report their progress periodically. More importantly, though, credit repair agencies and debt consolidation companies have resources that you do not. They are better at negotiating terms and interest rates and are better at tracking responses to debt verification and mistake correction. The trick is to make sure that you work with a company that is reputable because there are a lot of scam artists out there.
So how do you tell them apart? How do you make sure that the agency you hire is going to do what you need it to do (and do it well)?
Understand How Credit Repair Works
We’ve given you a basic overview of the process involved with credit repair here. This is just a summary, for the sake of time and space. Make a point to learn about the different aspects of credit repair and how they work. Knowing the lingo and understanding the process will help you spot scammers who will try to prey on your naivete. If you know more than the agency does, run and run fast.
Understand What Credit Repair Agencies Can and Cannot Do
A good credit repair agency will be upfront about the fact that there are some things they simply cannot do. They cannot get items that are true (however unfortunate they may be) erased from your history. They cannot make a company list you as being in good standing if you are not. They cannot put old good accounts on and take current bad accounts off. They can, however, work to make sure that you look as good as possible on paper. They can counsel you on safe methods for building good credit. Any agency that promises to erase the bad stuff completely should not be trusted.
Understand That Credit Repair Takes Time
It takes a minimum of thirty days for changes to be made to your credit report. Any agency that tells you otherwise is lying. A good way to tell the good from the bad is to look at the reviews that get posted about them online. Reputable agencies will have reviews that talk about how the credit repair process worked over time.
Read the Contract
Most credit repair agencies will charge a recurring fee for prolonged repair. Make sure you can cancel the service at any time. This is because, after six months or so, you likely won’t need that credit agency anymore. Alternatively, ask about packages that allow you to switch to basic monitoring once the bulk of the repair work has been completed.
Finally, remember: you need your credit to be as good as possible if you want to qualify for financing. If that means hiring some help, so be it! You wouldn’t hesitate to hire a professional to help you with your taxes, right? Why are you hesitant about this?