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Key takeaways

  • Credit repair companies can help improve your score by disputing inaccuracies and negotiating with creditors on your behalf.
  • Be aware of potential scams and ensure any company you work with complies with the Credit Repair Organizations Act.
  • You can take steps to raise your own rating, such as disputing errors, paying bills on time, and reducing debt.

A credit repair company specializes in improving your credit score. They do this by reviewing your credit reports and disputing any inaccurate negative information on your behalf. Inaccuracies are surprisingly common. The Federal Trade Commission (FTC) found that as many as 42 million Americans have found mistakes on their reports.

If you fall into this category or are simply wondering, “how to fix my credit?” using a credit repair service may be incredibly appealing. However, be careful, as these services charge fees and are not a quick fix.

We’ll go over how credit repair companies work and what you should consider before you hire one.

How do credit repair companies work?

Credit repair companies don’t do anything that you can’t do yourself. Their purpose is to make your life easier by getting inaccurate derogatory marks off your credit reports for you. Getting these marks off your reports, in turn, will boost your score.

Repair services typically include the following:

  1. Request your credit reports from the three major credit bureaus – Equifax, Experian, and TransUnion.
  2. Review your reports for adverse information, fraudulent activities, and signs of identity theft.
  3. Send dispute letters to the issuing bureau to remove inaccurate items.
  4. Negotiate with creditors to remove items.
  5. Work to fix any mistakes like inaccurate credit limits or incorrect balances.

The dispute letters should identify the error, explain why it is a mistake, and state what the report should say instead. Contrary to popular belief, your credit score will not drop when you check it. It only drops when you apply for a new account and the lender makes a hard inquiry.

What does credit repair include?

Their primary focus is to identify and dispute inaccuracies on credit reports, such as incorrect account details, outdated information, or fraudulent activity. They contact credit bureaus, creditors, or debt collectors on your behalf to resolve these issues, ensuring that the report accurately reflects your financial history.

Many companies will also negotiate with creditors to remove or update negative items, such as late payments, collections, or charge-offs. They may send a cease-and-desist letter to a debt collector on your behalf. Companies may also provide guidance on how to build a positive payment history or offer score monitoring.

Credit repair companies may not offer budgeting or money management advice

Credit repair companies are not the place to go for budgeting or money management advice. You’re better off visiting credit counseling agencies for a more holistic personal finance approach. These non-profit agencies offer various services to help you manage your money better and improve your financial situation long-term. They can create a debt management plan, set up a realistic budget, give advice on how to improve your score, and more. It’s almost always a good idea to visit a credit counselor first.

How much does credit repair cost?

credit repair

The cost varies widely depending on the company and the complexity of the client’s issues. Many companies charge an initial setup fee ranging from $15 to $200, followed by a monthly fee that can be anywhere from $50 to $150. Some companies offer tiered pricing plans based on the level of service provided, while others have a pay-per-delete model with fees ranging from $25 to $100 per deleted item.

The fees a company charges can add up fast. Make sure costs fit your financial situation and that you have lots of inaccurate information first. Often, it’s better to dispute adverse items yourself and use your money to pay down debts.

How to choose the best credit repair company

Choosing the best reputable company requires careful consideration.

Compare plans for features and fees

Evaluate the range of services offered and compare pricing structures. Transparent companies will clearly outline the payment plan and provide a detailed explanation of their services. Be wary if a company promises quick fixes or to remove accurate negative information, as these claims are unrealistic.

Read reviews and check for scams

Start by researching the company’s reputation through online reviews, testimonials, and ratings from trusted sources like the Better Business Bureau. Look for any regulatory action or lawsuits on the government websites Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB).

Check for Credit Repair Organizations Act violations

All companies must abide by the Credit Repair Organizations Act (CROA) to remain compliant with federal law. This law was designed to protect consumers from fraudulent or deceptive practices.

Under the CROA, companies:

  1. Cannot make untrue or misleading statements
  2. Must prepare a written contract outlining your rights, the services to be performed, and any associated costs.
  3. Can only charge fees after the work has been completed.
  4. Offers customers the right to cancel contracts within three days.

Avoid any company that fails to adhere to these regulations.

What to know before hiring a credit repair company

Many consumers seek out credit repair services when they’re unsure how to fix their credit on their own. Before you hire one, know that there is no quick fix. Repairing your score requires time, patience, and usually a combination of efforts. Companies can work to remove adverse, inaccurate information, but if the negative items are accurate, there’s not much they can do. Also, for your score to really improve, you need to pay down debt and establish a positive payment history. It’s a good idea to seek credit counseling first, as they can help with your entire financial life.

What to watch out for with credit repair companies

There are plenty of scams. A few red flags to keep an eye out for are:

Demands upfront fees: This practice is illegal under CROA, which mandates that companies cannot charge for services until they are completed. It suggests that the company may not deliver on its promises. Some companies do charge monthly fees.

Guarantees specific results: Promises may include to improve your score by a specific amount or the removal of accurate information. No legitimate company will make these guarantees. The outcome will vary depending on your circumstances and the information on your report.

Advises you to dispute all information: Disputing all negative marks on your credit report—even accurate ones—is both unethical and ineffective, often leading to further complications. You may face legal consequences or further damage to your score. Avoid companies that suggest disputing all information regardless of its accuracy.

Promises a new credit identity: This can involve obtaining an Employer Identification Number (EIN) to use in place of your Social Security Number. This tactic is illegal and can result in severe legal consequences, including fines and imprisonment.

Refuses to answer questions: A legitimate company will be transparent about their services both what they can and cannot do.

Does not explain your rights: Under the Fair Credit Reporting Act consumers can dispute information themselves. Any company you work with should make that clear.

Tells you not to contact the bureaus: You can advocate for yourself. A company that tells you not to is suspicious.

Learn more on MoneyFor.

What should you do if you encounter a fraudulent credit repair agency?

If you suspect that you have encountered a scam, cease all communications and avoid making any further payments. Gather all documentation related to your interactions with the agency, including contracts, emails, and payment records.

Report the fraudulent agency to the Federal Trade Commission (FTC) by filing a complaint online. Additionally, contact your state attorney general’s office and the Consumer Financial Protection Bureau (CFPB) to alert them about the scam.

If you have already made payments, contact your bank to dispute the charges and potentially recover your funds. Taking these steps can mitigate the damage and prevent others from falling victim to the scam.

Struggling with a poor score?

Learn how to fix your score in eight steps.

Ways to improve your credit on your own

It’s entirely possible to get a good score without hiring anyone. If you have bad credit and are wondering how to fix my credit score, the first step is to get your report from each credit bureau and check them for mistakes or signs of identity theft. You can request your reports for free once a year at Review them and dispute any errors you find.

Next, you’ll need to understand how your credit score is calculated. Scores are a combination of five key factors:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • New inquiries (10%)
  • Mix of accounts (10%)

Knowing these can help you target areas for improvement.

Pay Your Bills on Time: Payment history is the most significant factor. Pay all your bills when due. Set up autopay or reminders to help you stay on track and avoid human error.

Reduce Your Debt: High balances can negatively impact your score. Aim to pay down your balances and only use 30% of your limit.

Avoid Opening Too Many New Accounts: Each time you apply for a new account, a hard inquiry is made, which can temporarily lower your score by a few points. Be selective and apply sparingly.

Maintain Older Accounts: How long you’ve had accounts affects your score. Keep older accounts open and active even if you don’t use them frequently.

Diversify Your Accounts: Having a variety of accounts can positively impact your score. However, only take on new debt if you actually need it.

By following these steps you can effectively learn how to repair credit and improve your score.

Read more about credit cards!

How long does it take to repair credit?

When you dispute a negative item, the bureau has 30-45 business days to investigate it. If you have a lot of items to dispute, this can drag on for a few months. Bureaus may also decide not to investigate disputes they consider frivolous. If they make this decision, they must let you know within 5 days of filing. Getting a negative mark off your report can give an immediate boost to your score, but how much depends on the nature of the item and how old it is.

Getting a good score can take anywhere from a few months to several years of positive financial habits coupled with disputing items. How long it takes depends on the severity of your negative marks, the amount of debt you have, and where your score was to begin with.

One common question is, “how long does a repo stay on your credit?” Negative items like a repossession stay on your report for up to seven years from the date of the first missed payment that led to the repo. The negative impact will diminish over time.

Improving your score is a gradual process. Regularly monitor your reports, dispute inaccuracies, make timely payments, reduce debt, and you will see your score go up.

Does credit repair work for everyone?

Credit repair can be effective, but it doesn’t work for everyone in the same way. Success largely depends on the nature of the issues affecting your score. If your report contains errors or inaccuracies, disputing these can lead to significant improvements. However, if your problems stem from accurate information, such as missed payments or high debt levels, there’s not much they can do for you.

Frequently asked questions

The process typically involves reviewing your reports, identifying inaccuracies, and disputing them with the issuing bureau. Over time, as errors are corrected and positive financial behaviors are established, your score will improve.

Paying someone can be worth it if you lack the time, knowledge, or confidence to handle the process yourself and have a lot of inaccurate negative marks. If the negative items are accurate, the company won’t be able to do much for you.

These companies can be effective. They help identify and dispute inaccuracies on your report, potentially improving your score. To see a big difference, you need to establish responsible financial habits, primarily paying down debts and making timely payments all your bills.

These specialists review your reports to identify errors, inaccuracies, or outdated information then dispute any they find with issuing bureaus on your behalf. They can help uncover identity theft or incorrect personal details.

Bottom line

Credit repair companies offer valuable services for those who need a credit fix, particularly for people who lack the time or expertise to manage the process themselves. However, they don’t do anything you can’t do yourself free of charge. The costs can quickly add up, as it usually takes several months to complete.

If you decide the services are worth it, look for reputable companies and be aware of red flags.

Improving your score requires patience, diligence, and a commitment to positive financial habits. You can gradually raise your rating by disputing inaccurate negative marks, paying bills on time, and reducing debt. Whether you choose to work with a professional organization or handle it yourself, the key is to take proactive steps toward a healthier financial life.

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.