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How to Fix Your Credit With a Credit Repair Service

9 min read
Sean Messier Michelle Black By Sean Messier
Expert reviewed by Michelle Black
Updated Mar 27, 2020
At a glance

Everything a credit repair company can do, you can do on your own — without paying additional fees. But not everyone has the time to spare for do-it-yourself credit repair, so you may benefit by using credit repair services to dispute reporting errors and negotiate with lenders.

Some credit repair companies make seemingly outlandish and unbelievable claims such as “Get A 720 Credit Score in 30 Days” or “Erase Your Bad Credit in 2 Weeks – Guaranteed!”

You don’t have to look very far to find a credit repair scam artist looking to rip people off with the promise of a credit score magic wand.

However, just because there are companies preying on consumers with damaged credit, does that really mean that all credit repair companies are scams? Depending on whom you ask, the answer you’re going to get will either be a resounding “yes!” or an even more resounding “not at all!”

Credit repair services can’t perform magic, and they can’t do anything that you can’t do yourself. Credit repair companies won’t erase your debts nor can they promise to remove valid negative items from your reports. What they can do is help you make sure your credit reports are completely accurate. This gives you the chance to earn the best possible credit score for your situation. But they won’t be able to erase your debts or remove valid negative items from your reports.

Insider tip

Of course, you have the right to repair your credit by yourself if you’d rather not use a credit repair company. It shouldn’t cost you anything unless you have to pay down your debts, which you may eventually have to do even if you’re using a credit repair service. The tradeoff? You have to manage everything on your own, which may take quite a bit of time. Plus, the credit repair process can sometimes be more challenging than it appears.

What Is a Credit Repair Company?

Credit repair companies are for-profit businesses that aim to help consumers improve their credit, typically by disputing inaccurate information on their credit reports. An example is a company like Credit Saint (we may get a commission if you use their services).

You can try to fix your credit by yourself if you’re up to it, but credit repair companies may be able to deliver results faster and more effectively — at a cost — thanks to their experience.

Though they operate in the same realm, credit repair companies shouldn’t be confused with credit counseling agencies, which are typically nonprofit agencies that deliver advice and education to individuals struggling with debt. Credit counseling agencies also provide services (generally for a fee) that may help consumers reduce unsecured debt using a debt management plan (DMP).

How Credit Repair Companies Work

You’ll likely save money, potentially hundreds of dollars or more, if you choose to fix your credit by yourself. But we also recognize that you may not be swimming in free time, so it could seem easier to set aside some cash to invest in credit repair services.

Before you commit to professional credit repair, make sure you know what you’re paying for.

What Can Credit Repair Companies Do?

A credit repair company can’t guarantee any improvements in your credit scores. Results are ultimately dependent on the specific factors that are dragging your credit scores down, as well as how you manage your credit during the repair process. For example, if you pay a bill late while your credit is being repaired, your scores might drop despite the negative, inaccurate accounts a credit repair company gets deleted from your credit reports.

Credit repair companies can perform three important functions that may help you clean up your credit and achieve the improvements you’re looking for:

1. Challenge Errors on Your Credit Reports

Credit reporting errors are shockingly common. A 2013 FTC study revealed that as many as 25% of credit reports have errors on them. That statistic is a bit old, but credit reporting processes haven’t changed much since then, so errors certainly aren’t out of the question.

Credit repair companies can dispute inaccurate credit information, like credit or collection accounts that aren’t actually yours, on your behalf. They may also be able to help you spot less obvious credit reporting errors that you would have missed on your own, like negative accounts that have been on your credit reports longer than the law allows.

Ordinarily, you’d have to send your own dispute letters and sort each dispute out yourself. This can be both intimidating and time-consuming.

Relying on a reputable credit repair company to manage the dispute process for you may still take time, but you can at least rest assured that the task is being performed by a professional.

2. Dispute Negative Items

Every item on a consumer’s credit reports must, per federal law, be verifiable. Some creditors who are no longer in business or who lack the infrastructure to respond in a timely manner won’t verify a negative item within the 30-day time period typically allowed for response.

For this reason, a credit repair service might dispute all or most negative items on your credit reports, whether accurate or not. If the creditor doesn’t respond soon before time runs out, the negative item will have to be removed from your report.

3. Negotiate for a Less Negative Credit Report

If you’re willing to settle or pay a past-due debt, some creditors might be willing to change the way they report your account to the credit bureaus. Some credit repair companies may handle such negotiations on your behalf.

Experienced credit repair companies often know which creditors are approachable and under what conditions. They may also be familiar with negotiation strategies you haven’t considered.

For example, a credit repair company might see if a creditor is willing to remove a negative item from your credit report in exchange for payoff. This is known as a pay-for-delete agreement. Another negotiation example is asking a creditor to remove late payments from your credit history once the account is paid.

Debt settlement services are typically offered separately from basic credit repair. As a result, you may have to pay additional fees for these negotiations (and they may or may not be guaranteed to succeed).

In some cases, a credit repair company may even be able to connect you with attorneys who can take legal action against creditors or debt collectors whose reporting or collection practices violate the law.

4. Give You Advice

Good credit repair companies should have a deep understanding of the factors that influence your credit scores. They may be able to look at your reports and give you advice on how to improve your credit beyond standard credit disputes.

For example, a credit repair company may know which accounts you should try to pay down or settle first to have the biggest potential impact on your credit scores. It may be able to help you come up with a strategy on the types of new accounts you should open.

Of course, this isn’t true of all credit repair companies. Some offer disputes or negotiation services and nothing more. If, however, you choose the company you work with wisely, you might have an expert source to turn to when questions come up during your credit improvement journey.

Q&A Video: Paying Off Collections Accounts and Shady Business Practices

What Can’t Credit Repair Companies Do?

If you’ve developed poor credit scores for valid reasons — poorly managed credit card accounts, spotty payment history, etc. — and your credit reports are accurate, then a credit repair company might not help you very much unless it’s an effective negotiator. Plus, as we said, negotiation/debt settlement services may cost you more than typical credit repair services, which can be a problem if you’re on a tight budget.

Credit repair companies can’t help you build credit from scratch, either. You have to have a credit file in order for it to be repaired.

Finally, credit repair companies can’t legally create a “new credit identity” for you, as some illicit agencies suggest they can. This is explicitly banned by the Credit Repair Organizations Act (CROA). Beware: If you participate in a new credit identity scam, you may be guilty of breaking the law too.

How Much Do Credit Repair Services Cost?

Credit repair pricing varies from one company to the next, but it’s typically in the same ballpark.

Upfront payment for credit repair is technically against the law. However, you can nearly always expect to pay some sort of startup fee, which run from around $10 to $200 — usually on the higher end of that spectrum. Depending on the credit repair company, your startup fee may cover an initial review of your credit situation and account setup.

The startup fee is often followed by a monthly fee that covers the credit repair service itself, usually somewhere in the $50 to $100 range.

Some companies may offer more flexible options, like the opportunity to pay for a set amount of time right off the bat to reduce the average monthly cost. However, beware. CROA bans upfront fees like these before credit repair services are performed.

Many companies also provide additional features, like credit monitoring, for a fee. These are sometimes packaged under a higher, more expensive service tier.

Reputable credit repair companies will often provide a free consultation to help you determine whether their services will actually help you (and which you’d benefit from). Just remember that these companies are for-profit businesses, so they may push products that aren’t essential.

If the company in question doesn’t deliver results, you may be protected by a money-back guarantee.

How Long Does Credit Repair Take?

Although there’s no set timeline for credit repair, credit reporting laws give you a good idea of how long you’ll have to wait to see results.

In most cases, thanks to the Fair Credit Reporting Act (FCRA), credit bureaus must investigate disputes to determine whether the information in question is legitimate within 30 days. If you dispute an item after claiming your annual credit report or you send additional information in the middle of your dispute, that timeline extends to 45 days. Either way, it’s a fairly quick turnaround time.

If the credit repair company successfully disputes these items in a timely manner, then your credit scores may rise in as little as three months, based on what we’ve seen from actual customer feedback. This time period will naturally vary, however, and situations that involve negotiation could take much longer. Every situation is different.

Do Credit Repair Companies Work?

Whether credit repair services will actually improve your credit mostly depends on a couple of factors. The first is whether there’s anything on your credit reports that can actually be fixed. Do you have reason to believe that there’s incorrect information on your credit reports? If so, credit repair might be right up your alley.

The second factor is how you manage your credit during the credit repair process. If you sign up for a credit repair plan and keep running up your credit cards or missing loan payments, you may sabotage yourself, and even successfully disputed errors are unlikely to save you.

If the only reason your credit scores are low is that you’ve made lots of late payments (or other credit missteps) over the years, professional credit repair may not be right for you. In this situation, you’re likely better off learning about responsible credit use and working toward better credit on your own.

With that said, even if you know poor debt management is the main reason for your poor credit scores, it’s worth checking your credit reports to make sure everything’s accurate. It’s possible for a credit report to contain both errors and legitimate negative information at the same time.

You can get one free credit report per 12 months from each of the major consumer credit bureaus — Equifax, Experian, and TransUnion — from AnnualCreditReport.com.

Credit repair services are completely legal, as long as the provider abides by applicable laws. Credit repair companies must follow a variety of clear rules laid out by the federal Credit Repair Organizations Act (CROA).

According to the CROA, credit repair companies must explain:

  • Your legal rights regarding credit repair (in a written contract)
  • The specific services they will provide
  • The total costs involved
  • Your right to cancel for three days at no charge
  • How long the process will take
  • Any guarantees the company offers

How to Identify a Legitimate Credit Repair Company

Credit repair itself is a legitimate service to sell, but that doesn’t mean there aren’t companies that rely on shady practices. Make sure you understand how to distinguish a reputable credit repair company from its ethically undesirable counterparts before signing any contracts or ponying up your hard-earned money.

In general, a good credit repair company will satisfy these criteria:

  • You get a free or inexpensive consultation: There’s no point paying for credit repair if it’s not going to help you. Legitimate companies will provide a free or low-cost consultation to help you determine whether credit repair is actually worth pursuing given your unique circumstances.
  • The company makes no promise to remove anything from your credit reports: No one can promise to remove something from your credit reports. Only the credit bureaus have the power to change your credit information. Promises that any information will definitely be deleted are a red flag.
  • You’ll be informed of your rights: By now, you’re probably aware that you can rebuild your credit on your own. Credit repair companies are legally mandated to tell you this before you enlist their services.
Insider tip

If you decide to hire a professional credit repair service, you can check with the National Association of Credit Services Organizations (NACSO) for accredited companies.

Consumer Complaints

Credit repair services aren’t inherently bad, and we won’t disparage any legitimate company doing business in the credit industry. However, when patterns begin to appear in consumer complaints related to a certain industry, it’s best to take notice.

We’ve decided to include three of the most common gripes we’ve noticed in credit repair customer feedback.

1. Credit repair can be expensive.

Startup costs of $50 to $200 (give or take), plus monthly costs, can put a serious dent in your cash flow. And even if you do see progress, these costs may seem disproportionately high compared to the improvement in your credit scores. However, keep in mind that higher credit scores might help you recuperate these expenses if you’re able to qualify for better financing offers in the future.

2. Credit repair may be hard to cancel.

Many credit repair companies charge a startup fee and then bill in arrears (which you’re billed after services have been rendered) for monthly services. As a result, you may owe one more bill after you cancel your services. Unfortunately, the billing process isn’t always disclosed or understood well upfront. Make sure you read your contract in full so you understand the provider’s cancellation policy.

3. Credit repair and debt settlement are separate services.

It appears to be a somewhat common belief that credit repair companies will help you fend off debt collectors or negotiate payoffs with lenders. While credit repair companies may offer similar services, it’s not generally included under the typical credit repair umbrella. Make sure you discuss your precise needs with the company before signing a contract.

Read more

How to Pay Off Debt: 6 Strategies That Work

How Do I Know If Credit Repair Is Right For Me?

Repairing and rebuilding your credit is a long journey, whether you go it alone or enlist the help of professional services. Ultimately, only you can decide if it’s worth the cost and right for you.

Think you have what it takes to fix your own credit? Give it a shot. You could save money and, hopefully, learn more about how credit can benefit your everyday life.

If you’d prefer a helping hand but aren’t certain you’d like to use a credit repair company, consider contacting a Department of Justice-approved credit counseling agency. A credit counselor should be able to help evaluate your situation and develop a path out of debt. Just keep in mind that these services may charge fees as well.

Only interested in minimizing the effort you have to put into the credit repair process? Looking for one-on-one credit improvement advice? Credit repair might be worth considering.

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