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Ever wonder how credit-repair companies make money?

Life is seldom simple. We make choices. Sometimes they lead to good results, other times not. Whether that means getting buried under credit card debt or taxed by a business idea turned sour, the financial repercussions of a decision gone awry can be taxing, even ruinous. In such situations, there's no shortage of companies clamoring that they can help, including so-called credit-repair companies. What are these companies and how do they make money?

What are credit-repair companies? The best of them will help Tennesseans do what they could have done on their own - speak with the person's creditors about forgiving debt and establishing more favorable repayment options. Doing so can save a person money - assuming their creditor agrees to play ball. In the process, a Tennesseans credit scores will rise for an obvious reason: They will have an easier time paying the new, smaller amounts. And paying those amounts on time leads to a better credit score than failing to pay the old, bigger amounts.

Unfortunately, the field of credit-repair companies can be a bit like the Wild West. Legitimate companies exist, but there also many credit-repair scams waiting to ensnare Tennesseans already down on their luck.

These services usually employ one of four fee models. The first is subscription-based. A person will pay a certain amount each month, say $50-$100, until the service has cleaned up your credit. The trick here is that some companies overpromise and underdeliver, meaning that they might claim that resurrecting a person's credit score will only take six months when in fact it often takes much longer.

The second payment option is a flat fee. Under this model, a person pays a fixed amount regardless of how long the process takes. This approach has benefit of transparency (since the final bill is known in advance).

A third payment option is known as pay-per-deletion. As the name suggests, this approach means that a customer will pay for results. Each time the company gets negative information knocked off the person's credit report, the company gets paid.

The fourth approach is a bit different. Whereas the first three involve the company rolling up its sleeves and doing the work, the fourth is the company selling its know-how in the form of peddling do-it-yourself programs and online classes.

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
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