However, the process can seem overwhelming and confusing to an individual that has never had to deal with their credit directly. If you are wondering about free credit repair help, this post will give you the information you need to get started on the right track.

Free Credit Repair Help — The DIY Method

If you want to repair your credit on your own, you should understand that this can be a time-consuming process and that you will need to keep meticulous records. However, if you are comfortable with contacting the credit bureaus and your creditors directly, free credit repair help by doing it yourself is well within reach.

Get your free annual copy of your credit report, either online or by writing to each bureau. Under the law, you have the right to get your credit report for free each year — three, actually, one from each credit reporting agency.

Depending upon which state you live in, you may be entitled to a second free credit report, and if you’ve been recently denied credit or employment based on your credit files, you can get yet another free report.

Once you have a copy of the reports, it’s a matter of going through the dispute process to remove any inaccurate information.

Free Credit Repair Help — Consumer Agencies

One of the biggest obstacles when it comes to credit repair is misinformation. If you want to be sure you’re getting information that you can trust, you need to look to reputable sources. There are several agencies that provide information about free credit repair help and credit in general:

The FTC (Federal Trade Commission) — is in charge of protecting consumers’ rights. This government agency offers information on credit and credit repair, as well as tips for individuals who want to hire a credit repair specialist. Because the FTC investigates many thousands of fraud claims when it comes to credit repair, they take an extra-cautious stance when it comes to credit repair companies in general.

The BBB (Better Business Bureau) is another consumer advocacy organization, but it is not a federal agency. They do, however, collect information on a local and national level about all companies, including credit repair companies. They also have resource pages that cover various tactics to use to manage your credit and get yourself on track for free

Both of these agencies provide information on free credit repair but for actual free credit repair help — that is to say, advice — you will likely need to turn to additional sources.

Free Credit Repair Help — Free Consultations

Many credit repair agencies offer free credit repair help, at least in terms of initial information to get started. It’s common for these credit repair companies to offer free initial consultations, as well as websites full of free downloadable documents to help you on your path to increase your credit scores.

Lexington Law and the Credit Assistance Network, just to name two out of many companies, offer free consultation to get you started. Many of the legitimate credit repair businesses will give you a free consultation and advice as to how to proceed, and a real business trying to help you won’t ask you to sign anything until you’re ready.

The NFCC (National Foundation for Credit Counseling) offers free resources – calculators, budget worksheets, consumer tips and an online financial self-assessment tool. They offer free and low cost counseling to determine your needs and develop personalized plans.

With these three options for getting free credit repair help, there is no excuse not to take the plunge and start working on improving your own credit scores. The sooner you start, the sooner you will reap the benefits of good credit.

What it boils down to is a clear illustration of how important it is to make sure you’re not being lured into a scam when you are just trying to get your credit repaired.

According to the study, the average paid by individual consumers to (often unsuccessfully) repair their credit is around $816, and for debt settlement the cost goes up to $2,000. While you might feel more secure dealing with a company that offers a money-back guarantee, in practice you may end up disappointed.

A lot of the fraudulent companies claim that consumers will get a refund if they don’t get the progress they want- – and this study finds the average refund is only $67.

Signs of Bad Credit Repair and Debt Settlement Companies

Credit repair scams can occur in many forms. A common scam is the credit repair “clinic” that appeals to people with poor credit reports by promising to be able to remove any information, accurate or not. No credit repair company can remove legitimate, accurate items from your credit file. Any company that promises or implies that they can is a sure sign of a credit repair scam.

Debt settlement companies don’t fare any better. They typically want you to pay a monthly fee directly to them that is supposed to cover their cost as well as the cost of your debts after they’ve negotiated with your creditors to reduce the amount you owe.

They might tell you not to pay your creditors anymore, and send the payments to them. If the company is legitimate, then this can work, but at the cost of your good credit — every missed payment is another black mark on your credit report that lowers your scores.

However, most individuals don’t even get the minor benefits of debt consolidation because a shocking number of debt settlement companies don’t pay anything to the creditors at all. The money simply vanishes in this scam, with the consumer paying the price of both ruined credit and losing thousands to a scam artist.

The BBB wants several changes, and the report encourages federal and state agencies to get tougher and work harder to get the scam artists aggressively taken out before they damage more people’s credit and wallets.

It’s a sad fact that the debt settlement and credit repair industries are full of conmen, and that makes it difficult for people who are legitimate credit repair specialists to be taken seriously. Note: if you are considering credit repair, always choose a company that has a good reputation in the industry and that is backed by independent reviews.

The BBB also wants congress to amend the CROA to specifically rule out compulsory arbitration in lawsuits alleging violation of the act. Compulsory or mandatory arbitration can strip consumers of their right to go to court. This effectively means that if you get into a dispute with someone protected by compulsory arbitration, you could lose the right to sue.

Arbitration means that a neutral third party hears both sides and makes the decisions about the dispute. While arbitration can be much faster, averaging 8.6 months instead of up to 2 years for a court case, it is not necessarily good for the consumer. Not only is it not up to a court – the “neutral” person judging the case is probably going to be hired by the very people with whom you’re in conflict.

Always look at the contract or anything else before you sign away your rights. Make sure the FTC, and your State attorney general do not have negative reports about someone to whom you are about to give over your trust.

Finally, the BBB wants consumer oriented agencies to increase consumer education about credit repair and seeking help with debt. The Better Business Bureau wants consumers to make smart choices, not just about credit repair, but about their finances over all, and about how to choose companies who will help get bad credit back on track.

The most common site to get free credit reports from all three credit bureaus is annualcreditreport.com. However, this site only lets you get your reports once per year, so if you’ve already used it, be ready to pay up to buy another copy, or get in touch with a reputable credit repair specialist that will pull your credit on your behalf.

Once you get your credit reports, take the time to go over them. If you get them online, print a copy you can write on and then find every single item you know is not true or is reported incorrectly. Note whether they are just inaccurate, or completely untrue. This is another area where it’s helpful to have a credit repair specialist — if you aren’t sure about what to look for, they can guide you through the process.

Don’t Pay Collection Accounts on Credit Report Files without Validation

Collection accounts on your credit report files might not even be your debt. People make mistakes and if someone has a name which is very similar to yours, just a typo or error can cause you to have a collection account on your report that doesn’t even belong to you.

Additionally, debt collectors could be using skip tracing methods to find debt owners and you could find yourself a victim of circumstance. Debt collectors know that you have the same name so they just slip that debt onto your record and hope you pay up without checking up and validating the debt. This happens very often with people who have otherwise good credit, as debt collectors know that people with a history of good credit are likely to just pay to make it go away.

Collection Accounts on Credit Report Files that are Past the Reporting Limit

Even if the debt is accurate, if they are past the federal reporting limit, they should not be on your credit file. For most debts, anything that is over 7 years old should not be on your credit report — this includes loans, credit cards, charge-off accounts and accounts closed for nonpayment. The collection accounts on credit report files that are past the federal reporting limit can be removed by disputing the listing and pointing out the discrepancy.

Unfortunately some unscrupulous collectors may try to re-age the debt. If this happens, you’ll need to be prepared to offer proof of the age of the debt, or to challenge the debt collector directly for validation. Otherwise, you risk being a victim of zombie debt, with the collectors getting seven more years to keep harassing you.

How to Remove Invalid Collection Accounts on Your Credit Report

If a debt collector contacts you about a debt and you’re not sure if it actually is yours, you can request validation. Under federal law, you can insist that the debt collector provides you documentation proving the debt is yours.

Five days from the first contact, the collector has to send you a debt validation notice. It should be in writing and let you know your right to dispute within 30 days. The amount of debt, the name of the current creditor and notification you can request verification of the debt and the original name and address of the original creditor within 30 days should all be on this paperwork.

It may be included in the first contact letter. If it’s by phone, you should receive a debt validation notice in five days. If you don’t dispute in 30 days, then the collector will assume the debt is valid, and during that period, the debt collector can keep attempting to collect.

In writing, request debt validation for the collection accounts on your credit report. Even if you owe the debt, if the debt collector can’t produce evidence that they own the debt and that you owe the amount listed, they cannot continue to try to collect. The trick here is to not dispute the debt with the credit bureaus first, because if they do have proof, it will be considered frivolous disputing and you can have other, valid disputes ignored because of it.

If you only owe part of the debt or none of it, then insist that they prove you actually owe the money. Always use certified mail and request a return receipt – documentation is your parachute to safety if you have to go to court over their mistakes.

The collection agency has to send you proof it owns or was assigned the debt by your original creditor. The agency can’t just send you a printout with the amount owed – they have to include documents from the original lender.

If they don’t send you proof within 30 days, they cannot continue trying to collect the debt and they can’t list it on the credit reports — you can dispute freely then and send a copy of the validation letter and return receipts. Once that’s settled, you can get rid of your collection accounts on credit report files for good.

However, this process only works if you take the time to get your bad credit under control. Get started on your own or with the help of a credit repair agency because the longer you wait, the more difficult it may be to get your credit into good standing.

Sound impossible? It has already happened. 

A company called Accretive Health has started playing out this quite possibly illegal drama in hospitals across this country, including healthcare facilities in Minnesota, Michigan and Utah.

Debt collectors are being placed in emergency rooms, dressed as hospital employees. They reportedly demand outstanding bills be paid up before patients receive treatment. Hospitals floundering under a mountain of unpaid bills are taking things to the next level – hard core debt collections right inside the hospital itself.

If you have had a charge-off or other debt, these bogus health care workers reportedly try to discourage you from seeking emergency treatment at all. Accretive Health’s debt collectors have also been reported to use collection scripts usually only heard over the phone by hard nosed agents using harassment tactics to get peopleto pay.

And in spite of laws stating otherwise, they don’t always identify themselves as debt collectors — reportedly, part of their plan is to make you think they’re hospital staff, not back office personnel. These debt collectors are not supposed to be part of the admissions process, legally or morally. It breaks all trust with the hospital to have the credit department harassing patients while they are sick, vulnerable and helpless.

Charge-offs, Medical Bills and Missed Treatments

According to an online report by the New York Times, collection employees were told to stall patients coming into the emergency room and make them enter into a payment agreement for a previous balance.

The agents were told to ask for a credit card payment before getting treatment – or to tell patients to go and get their checkbook. These bill collectors required point of service payments before they let patients receive treatment, and were described as ‘really aggressive’ by one victim. The actual hospital workers complained that patient care suffers while collections improve – the report says that medical staff complained that patients were harassed mercilessly.

In fact, doctors at the affected hospitals are complaining about strong arm tactics actually discouraging patients from seeking life-saving treatment, but their complaints were trivialized by the debt collection company, who were reported as saying that the doctors’ concerns are just ‘country club talk’. Additionally, some even some debt collection staff members thought the situation went too far. They reported that they are being threatened with termination if collection quotas aren’t met.

How did the collection agencies get so much power to hold your medical treatment hostage against charge-offs? The hospitals were promised savings and increased collections if they turned over some of their administrative functions. And suddenly, collection agents were dressing as hospital staff and trying to strong arm patients into coughing up cash before being allowed access to health care. And collections are, indeed up – but at what cost?

Your Medical Privacy Compromised by Charge-offs and Other Debts

According to reports, the debt collection workers have direct access to health information while chasing down patients about their charge-offs and past due bills. This is being investigated as it could violate a long list of federal privacy laws. Perhaps this access is for investigating the debt, but HIPAA affords patients equal rights, whether or not they are able to pay. It’s been reported that one patient’s cancer status was discussed between debt collection employees — a circumstance that is certainly none of their business or concern.

What can you do if you are confronted by a bill collector about a charge-off in a hospital?

Know your rights. If they don’t identify themselves as debt collectors, they have violated the law and you can report them to the FTC and your state attorney general. If you suspect you are dealing with a debt collector and not actual hospital staff, you may want to seek treatment elsewhere in order to preserve your medical privacy.

Accretive Health is already under investigation in Minnesota by Attorney General Lori Swanson for its very shady tactics. Fairview Health Services, a Minnesota hospital group, has fired them, but Accretive Health recently announced its been picked up by a major health care group that serves 11 states. So be aware that the situation is spreading. If you have charge-offs or other medical debts that you need to dispute, do so now. Otherwise, you may find yourself being given the runaround at the ER over demands to pay.

KD – key derogatory

This is a term you may find on your credit report if you’re trying to do some credit rating repair – it means a negative incident appearing on your record, be it a charge off, judgment or other negative event, of which there are many, which will affect your credit score. Derogatory and key derogatory share the same meaning in most cases, but while the other two credit report bureaus use them this way, Experian does not. Experian requires that to be a Key Derogatory, it must be a government debt, such as an unpaid student loan, term default (defaulting on the payment terms of a contract, such as mortgage default), a bankruptcy, settled debts (this includes short sales), or unpaid claims (collections, etc.)

Judgment

A judgment is the last result of a legal action. Unpaid judgments can stay on your record for seven years from the filing date or the statute of limitations – whichever is longer. Each state has their own statutes, so check on your state’s SOLs if you want to know how long you have before you will be able to consider it done with. Also, they often have renewal terms – that means if you don’t pay it, it can be renewed against you and that can go on for a very long time. This makes credit rating repair especially difficult, and you’ll want to handle any judgments that can be disputed first in your credit repair efforts.

Paid judgments are different. They can only report for seven years, regardless of the statute. In some cases, a paid judgment may be removed from your credit file before the 7 years are up if you dispute the judgment before it has been updated to reflect its paid status.

If you have the cooperation of the plaintiff (the person who got the judgment against you) you can also ask for a ‘set aside’ letter, which is a motion to get the judgment overturned – but this requires either complete cooperation from the person who won the judgment against you or an airtight case and a lawyer.

Lien

A Lien is a legally binding claim to secure a debt. A lien could be a tax lien – the government uses these on all sorts of unpaid taxes – or a property and mechanics lien. What a lien does is make you pay before you are allowed to pay anything else, and make it impossible to sell or refinance whatever it is upon which they have placed the lien.

It’s fairly common practice for businesses to place liens on property to insure they’ll get paid. You cannot remove a lien from your credit until it is satisfied, so you will want to get this paid off if you’re going to attempt credit rating repair.

Collection Account

One of the biggest hurdles to successful credit rating repair is the presence of multiple collection accounts. A collection account is what happens when you stop paying on your debt and it remains unpaid for a certain length of time.

The owner of the debt will then attempt to collect on the unpaid balance by transferring it from a normal account to a collection account. In other words, you have been kicked from the good standing list to the doesn’t pay his bills list.

A collection account may be handled by the business’s own collection department, or they could be handed off to a outside or third party collection agency. Either way, they want you to pay up and are willing to spend a lot of their time (and yours) doing it.

Charge-off

A charge-off is not, as some think, when a debt’s been just canceled out. When you get a charge off, that means the account is no longer open for you to use, and you still have to pay it off. You’re just marked in their books as a loss. This adds a negative entry, a charge off, to your credit report. They will still try to collect on the debt or get an outside agency to work on it.

An account is usually labeled a charge off when its in 180 days of less than minimum payments. To get one removed, you have to wait for seven years or your state’s Statute of Limitations, or negotiate with the debt holder to have it removed if you pay up. Just paying it will only change it to ‘settled’ or ‘paid’ but it will still be there. Removing a charge-off is essential to credit rating repair.

Third-Party Collection Agency

A third-party collection agency is simply an outside collection agency that came in late – they are not part of the original contract. The agency takes a percentage of the debts collected. The type of debt and age of the account determine the percentage the agent gets for collecting the debt – it could be as low as 10% or as high as 50% depending on the agreement or whether they buy the debts outright.

While there are many legitimate businesses who use outside collection agencies, many incidents of harassment and illegal collection methods used by the less scrupulous. Third-party collection agencies in the U.S.A. are subject to the Fair Debt Collection Practices Act of 1977, which was created in an attempt to control how third-party agencies are allowed to proceed.

Understanding these terms and how they apply to your particular situation will help you to successfully complete your credit rating repair and get the financial freedom you deserve.

Repairing Bad Credit: First Steps

If you have the financial means, repairing bad credit can start by re-evaluating your spending habits and allocating additional funds to pay off your debts. However, that may not always be the best solution. In some instances, such as the case of time-barred debt, you’ll need to make some strategic choices in repairing your credit.

The first step is always to take a look at your credit report. When repairing bad credit, you need to see what you’re up against and knowing what’s listed on your report will help you to make the best decisions possible when dealing with your creditors.

Repairing Bad Credit: Negotiate and Pay

Negotiating should only be done when you are repairing bad credit for accurately reported debts you actually owe and have the means to repay. If you do not, then negotiating can actually make a bad situation worse, as your creditors will be less likely to offer any leeway in the way they report your debts. Your best option is to be realistic, always, about your ability to pay.

Furthermore, it can be intimidating to negotiate over the phone. Repairing bad credit through the mail may be a better bet unless you are used to doing phone negotiations. You’ll have time to gather your thoughts and won’t be confronted by an aggressive collection agent. Written correspondence also offers you a chance to get their responses in writing – a very important legal consideration. You want to get everything you can in writing in case you need to dispute the listing. Use certified mail with return receipts so you have a record of attempting to negotiate, as well.

If you do try to negotiate over the phone, always request everything in writing before moving forward. Always pay off your original debtor if you can, because it just looks better on the credit report, especially as the original creditor can remove the report entirely most of the time.

Collection agencies, however, are second party collections and paid to get your debt, pennies on the dollar. Negotiation time. Do not pay them the full amount if you don’t have to, and it is worth adding that it is illegal to charge you a collection fee on top of your original debt so don’t be fooled by their agents’ claims otherwise. You can go as low as thirty cents on the dollar, and be willing to let them talk you up to 50 cents on the dollar.

After you have started negotiations, monitor your credit so you can make sure they did what they said they would do and remove the bad record of your debt. Once you have made payment arrangements, they must fulfill their agreement to report a change in your status with them or if applicable, remove the negative item entirely.

Repairing Bad Credit: Filing Disputes

Sometimes when you are repairing bad credit, you will find items on your credit report that you do not owe, or that are incorrectly listed. Get rid of these items by filing disputes and following up with concrete evidence that the debt is reported inaccurately.

In terms of updating listings, 30 and 60 day past due listings are easiest to prove with your current creditors. They want to get paid – you want good credit. if you have paid on time and have a receipt, it should just be a matter of providing the confirmation number in order to get the problem fixed. Remember — if you use the phone to speak with creditors, try to get them to give confirmation in writing or ask for a phone ticket number to confirm your conversation later. If they aren’t willing to do so, it may be a sign that you need to follow up with the credit bureaus to be sure that your file has been updated.

Repairing Bad Credit When You Have Charge-offs, Liens, and/or Judgments

All of these are going to seriously impact your credit score. Charge-offs are often handled in house by your original creditor, so if you still have an open account with them, negotiate, negotiate, negotiate! Their desire to keep you as a customer (if you’ve previously paid on time) can help make the charge-off it disappear.

However, you will have to pay it off if it is an accurate debt. A charge-off does not mean that you no longer owe the debt — just that the company thinks you won’t pay it off, ever. That’s why a string of charge-offs is essentially poison to your credit score. Repairing bad credit means paying your debts that are valid and timely. If the debt is accurate, you are not going to have a good chance of getting it removed, so negotiations are the only real option.

Liens and Judgments are the ones you absolutely cannot just negotiate away entirely. They have to be paid off before you can get them removed. This does not mean you cannot negotiate with the holder of the lien or the person who has the judgment against you, but very definitely get your paperwork in order before tackling it. You need to back up everything and keep documents, and know when you have it paid off so you can get it removed from your credit record and restore your credit to its potential glory.

Clear My Credit of Inaccurate Information

Getting rid of inaccurate information is the best way to start if you’re looking to clear your credit and get negative items removed. Any past due bills that you have proof of payment for is a good place to start. You can dispute these items directly with the creditors, or you can have a professional credit repair company act on your behalf.

If there is inaccurate information in regards to the amount owed, your name, your address, or any issues that make you believe the debt may not be yours, you can dispute this as well. However, you will have the most success with your payment disputes if you have solid information and documentation to back up your claim. This can be in the form of receipts, old banking statements, cancelled checks, or other proof of payment.

Clear My Credit of Outdated Information

The federal reporting limit for most debts is 7 years. Debts that are listed beyond this point can be challenged and removed. This includes charge offs, closed accounts, loans, and most other types of debts. Bankruptcies remain on your credit report a bit longer and can be removed after 10 years if not automatically removed by the credit bureaus.

Getting rid of outdated information is typically easy — you or the credit repair company that you hire can dispute that it is after the federal reporting limit and the credit bureaus will typically remove the outdated negative items right away. Where you may run into trouble is in the case of illegally re-aged debt.

Some debt collectors try to keep negative information on you report for longer by making the debt appear more recent than it actually is. This is called “re-aging” and it can make it appear as though you only recently stopped paying on a debt that is many years old. When this happens, it can not only be more difficult to remove, but it will also drop your credit scores because how recent a negative item is impacts your credit scores. The more recent the negative listing, the more it harms your scores.

If you have proof that the debt is older than is being listed, you will have to supply that information when you file your dispute. Otherwise, you may be able to get information on the actual age of the debt from the original creditor. Regardless of which route you choose, re-aged debt is not only bad for your credit score, it’s illegal for debt collectors to do so — make sure you follow up to preserve your rights.

Clear My Credit of Unverified Information

While you would expect that all information placed on your credit report has been verified, this is often not the case. It is not uncommon for third-party debt collection agencies to place negative items on your credit file without actually verifying whether or not you owe the debt as listed. The easiest way to clear your credit of unverified debt is to contact the debt collector and ask for both verification and validation of debt.

This means that they should be able to tell you the exact amount owed, the original creditor, and other pertinent details. If they cannot produce validation and verification of your debt, they are supposed to cease collection activity and remove the negative item from your credit file. You may find it easier to work with a credit repair specialist when it comes to unverified debt, as it may take more than one round of letters to get some collection agencies to comply.

Given the fact that several debt collection agencies have even been fined hundreds of thousands of dollars for violations relating to accurate debt reporting and collections, you cannot be too careful about clearing your credit. Never take the word of a creditor and always check your own records. If you need help, hire a reputable credit repair agency to get you the results you need.

Regardless of what route you take to clear your credit, make sure that you get started now. The longer you wait, the more difficult it will be to get your credit scores back on the right track.

Best Credit Repair Company Tip 1: Know Where Your Problems Lie

Before you start looking for the best credit repair company, you need to have an idea of how big the problem is. Most people only realize that they have problem credit after being denied a loan or a credit card. If that is the case with you, you’re in luck: you can order a free copy of the credit file that was used to make the decision to deny you credit. Otherwise, you’ll need to order a copy of your credit report from each of the different bureaus.

Once you have copies of your credit report, make a note of any issues you see, including late payments, charge-offs, collection accounts, judgments, bankruptcy or liens. You should be able to see where your biggest problems are by looking at the reasons for denial of your credit if you were denied a loan or credit card. Otherwise, just list out all the negatives you have on your report.

Best Credit Repair Company Tip 2: Prioritize Your Needs

Getting rid of an old charge-off may not have as big an impact as updating a current account to show that you’ve paid on time for the past 6 months. Decide which areas you want to focus on, and if you need additional help in understanding your rights as a consumer. You should also decide what services will be of most benefit to you. Some credit repair companies offer negotiations with creditors, for example.

If you need any extra services to clean up your credit report, make sure that you put them on a list so you don’t forget once you start comparing credit repair companies.

Best Credit Repair Company Tip 3: Watch Out for Scammers

Don’t fall into the “pay now for service later” trap. If you pay anything at all up front it should be for reasonable set-up and administrative fees. Otherwise, avoid any credit repair company that charges you before the work is done. The best credit repair companies will offer a pricing breakdown so you can see where the money you pay gets spent.

Also avoid any “guaranteed” credit repair. There is no way that any credit repair company can offer a 100% guarantee of improved credit, because each consumer’s situation is different. Keep you expectations realistic and you’ll eliminate 80% of the scam artists out there. For the rest, a quick visit to the Better Business Bureau’s website can shed some light on the company’s reputation.

Best Credit Repair Company Tip 4: Confirm Past Results Before You Sign

Once you’ve chosen the best credit repair company for your situation, take the time to find out a bit more before you sign on the dotted line. Ask to speak with past clients, or take a look at feedback the company has received elsewhere. Make sure that this company has experience with similar credit problems such as yours, and that they understand what you need help with.

Most credit repair companies are happy to answer questions, and the best ones often have dedicated agents that can help you before you decide to sign up. Remember, you shouldn’t be paying a lot (if anything) up front for your credit repair.

Best Credit Repair Company Tip 5: Stay Proactive

Handing off your credit repair doesn’t mean that you shouldn’t keep up with what’s going on. Even if you have the best credit repair company in the world, you need to stay on top of the credit repair efforts and ask any questions you may have as the situation changes.

You especially want to pay attention to any items that the credit repair company was not able to remove – was your documentation inadequate? If so, do you have more information you could use to help prove your case? Staying on top of credit repair is the only way to make sure you get the best credit scores out of your investment.

No matter which credit repair company you ultimately choose, following these five tips will help you to make sure that you get the best credit repair company for your particular situation, so that you get the most improvement in your credit scores.

This is where the problem typically comes in when you have a charge off, because it may be some time before collection attempts on the account begin again. When they do, it is also very likely that it will be a third-party collection agency that attempts to collect on the debt. Knowing when to pay a charge-off and when you should not pay a charge-off is important not only for your finances, but for keeping your credit score as high as possible.

When You Should Pay a Charge-Off

The Charge-off is Recent

If the charge-off is very new, you are likely to see a big dip in your credit scores – and the higher your score, the bigger the dip. While a charge-off may take 20 or 30 points from someone with a low score, for someone who has a higher credit score, a charge-off can cause the score to drop 100 points! This can mean the difference between qualifying with excellent rates and not qualifying at all for some types of loans, so if possible, make arrangements to pay the charge-off on the condition that it is removed from your credit file entirely. This is typically easier when the charge-off is new and you are dealing with the creditor’s in-house collection team.

You Have to Pay the Charge-off to Qualify for a Home Loan

It is fairly common practice in the mortgage industry to require that all outstanding debt be cleared before a loan can be approved. This includes late payments, judgments, liens and charge-off accounts as well. If the charge-off is very old, you may be able to negotiate a partial payment to get the debt settled, but always verify with the lender if a partial payment is enough to satisfy their lending requirements.

Pay the Charge-off if the Creditor Will Delete/Re-age It

Some creditors will delete a charge-off from your credit file if you make the payment in full. However, not all creditors will do this, and some will claim that it isn’t possible, though this is not the case. You may have more luck asking them to “re-age” the account, however. In this instance, it would reset the timer on the payments and essentially your pay-off would look like you settled the debt in a timely fashion.

As you can see, there are several scenarios where paying a charge-off is the best option, and they all hinge on the assumption that the charge-off is actually yours and you have verified the amount of the charge-off is correct. If you have not verified that the debt is actually yours and that the payment amount listed on the charge-off is accurate, you may be better off seeking professional assistance from a credit repair specialist before you commit to making a payment.

When You Should NOT Pay a Charge-off

There are also several instances when paying a charge-off is a bad idea. While the following is not an exhaustive list, if any of these scenarios apply to you, you should consider the avenues available to you to repair your credit before you pay a charge-off.

Your Charge-off Account is Listed for Multiple Companies

It is all too-common in the third-party collections business that debts are sold and re-sold with very little (if any) documentation. If you see the same charge-off account listed several times with several different collection agencies, it is worth it to have each agency verify the debt before proceeding further. Confirming who actually owns the debt will ensure that you don’t pay an unscrupulous debt collector who will take the money even if they no longer own the debt.

You Aren’t Sure You Owe the Amount Listed on the Charge-Off

Sometimes debt collectors try to tack on bogus fees and interest. Unless the agreement you signed with the original creditor stipulates that third-party collection agencies can add their own fees and interest, debt collection agencies cannot add their own fees. It is also possible that you paid off the debt, but due to an error in the system, your account was flagged as a charge-off. If you have any proof that the debt was paid,  you absolutely should not pay a charge-off.

However, even if you don’t have proof, having the debt verified may still work in your favor. A professional credit repair specialist will be able to advise you on the best course of action if you aren’t sure how to proceed.

The Charge-off is Past the Statute of Limitations

This last scenario will vary from state to state, as collection laws are different. However, if the charge-off is past the statute of limitations, you have a built-in defense against having a judgment brought against you fro non-payment. The catch is, you must go to court and defend yourself against any lawsuit brought by the collection agency.

Most collection agencies don’t bother filing a lawsuit if your debt is past the statute of limitations, so some people choose not to pay and instead let the charge-off drop from their credit file after the federal reporting period expires. This doesn’t help your credit scores in the short term, but it can save your finances if you are trying to pay down debts on currently open accounts.

Regardless of whether or not you choose to pay your charge-off, having the advice and experience of a trained credit repair specialist can help you to come to the right conclusion for your particular situation.

If you have credit problems, one of the first companies you may run across on your credit report is NCO Financial Systems, Inc. This same company may also be listed as as NCO Fin or NCO Credit Services. Regardless of which name you find it under, NCO Financial is definitely a company that you do not want to find in your credit file.

NCO Financial: Background

NCO Financial Systems, Inc, is a third-party collections agency, and they report to all three of the credit reporting agencies that determine your credit score.  According to their website, they provide accounts receivable management, debt collection and billing services and “customer relation management”.

While NCO Financial claims to be committed to high standards of ethics and customer service, online research reveals another, less pleasant side of their business operations, with multiple lawsuits over alleged violations of the Fair Debt Collections Practices Act (FDCPA), and a multitude of negative reviews and complaints all over the web.

NCO Financial may conduct legitimate debt collections activity on some accounts, there is an overwhelming amount of data both online and in court records that suggests you should be well-informed of your rights as a consumer if you decide to deal with them directly.

NCO Financial and Collections Accounts

Because they are a third-party debt collection agency, if you see the company listed on your credit file, it is likely a debt that you owed to another creditor. NCO Financial may work on behalf of your original creditor to collect the debt, but more likely than not, the debt was purchased for pennies on the dollar and the original creditor has nothing to do with the process.

Collection accounts on your credit report can mean a big hit to your credit score, and NCO Financial is aware of that fact. Often, their offer letters will come with promises to “update your credit file” after you’ve paid. The only problem is, you may not even owe the debt in the first place.

NCO Financial Pays over $400,000 to Settle Allegations

In December of 2008, NCO Financial agreed to a settlement in a case brought against the company by the Texas Attorney General. Rather than admitting that their debt collectors violated the Texas Debt Collections Act, NCO Financial agreed to pay $150,000 in consumer restitution and $250,000 in civil reimbursements and attorney fees. In addition, they also agreed to spend another $300,000 to monitor their Texas debt collections practices.

This is just one of many claims concerning NCO Financial that involves contacting people in an attempt to collect debts in a manner that is less than polite, and sometimes downright rude and even illegal.  In most instances, consumers are reporting that they call several times a day, regardless of whether or not they’ve been asked to stop.

There are also reports of NCO Financial harassing individuals at their place of work, and of continued harassment about debts that are not even owed by the person they’re contacting. More telling than the online anecdotes are the actual lawsuits and settlements paid. The Texas settlement was not a one-time issue, and in fact is just a drop in the bucket compared to some of NCO Financial’s other fines and settlements.

According to the Federal Trade Commission’s website, in 2004 NCO Financial had to pay out $1.5 million for violations of the FCRA for reporting inaccurate information to credit bureaus.

Protecting Yourself from NCO Financial

Your best bet with challenging a negative listing from NCO Financial may be to contact a professional credit repair specialist, or a credit repair lawyer. In this way, you don’t have to deal with NCO Financial directly, and everything will be documented properly without a lot of time, effort, and stress on your part.

However, if you do decide to go the DIY route, make sure you document everything. Send all letters with proof of receipt, and make a note of every phone call, including who you spoke to, and when. If you live in a state that allows single-party consent to recording, record every phone so that you have proof if harassment occurs.

If you live in a state that does not allow single-party consent for recording, you may still be able record if you inform the debt collector at the time of the call that you intend to record it. Also, any messages left on your voicemail are allowed as proof of harassment, no matter where you live.

If NCO Financial representatives are being very aggressive and abusive, don’t hesitate to exercise your rights as a consumer. Just because NCO Financial has a listing on your credit file, it doesn’t give them permission to act outside the law. Be informed, carefully document everything, and make sure you only pay what you actually owe.