How Does Credit Repair Work?

Bad credit holding you down? Mistakes on your credit report might be to blame. Luckily, there’s a way to get those errors removed and take your credit—and your life—back. It’s called credit repair and it’s a process that focuses on making sure your credit report is 100% accurate and fair.

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So how does credit repair work in real life?

On paper, credit repair isn’t all that complicated. It involves auditing your report, finding evidence of errors, disputing mistakes and following up. However, much like any household repair job, you might be better off calling in the professionals. The help of a credit repair company is a big advantage because the process can be too time-consuming to be effectively done on your own.

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    Let’s peel back the layers of credit repair and get to the heart of how it really works. Becoming familiar with the ins and outs of disputing credit report errors, hiring a credit repair company and building your credit will help you optimize the process.

    Credit Repair Basics

    Simply put, credit repair is the process of fixing your credit report if inaccurate information or mistakes are present. These errors are a lot more common than you might think: A study from the Federal Trade Commission in 2013 found 1 in 4 consumers identified errors on their credit report that could negatively impact their credit rating. 

    Just think, you could have a lower credit rating than what you actually deserve—and likely through no fault of your own! These errors can keep you from getting the loans and rates that you deserve. They can keep you stuck in your old car or old home, or limit your access to different types of credit.

    The mistakes themselves can be as tricky to spot as they are numerous. However, with some detective work—or the help of a credit repair agency—the credit repair process can help turn up various types of inaccuracies:

    • Accounts that don’t actually belong to you (like those that result from divorce).
    • Duplicate accounts (like debts that are sold multiple times and each appear as a separate account on your credit file).
    • Inaccurate accounts that may be the result of identity theft.
    • Incorrect inquiries (including hard inquiries you didn’t approve).
    • Information beyond the statute of limitations that should no longer be included on your credit report.
    • Inaccurate data or personal information (like misspellings or old addresses).
    • Missing accounts that could be positive items on your credit report.
    • Accounts that are actually open when they’re recorded as “closed,” and vice versa.
    • Incorrect public information like foreclosures and bankruptcies.

    There are a lot of ways mistakes can end up on your credit report. The credit repair process helps you keep those errors from disrupting the financial future you deserve.

    What Credit Repair Isn’t

    Credit repair can be an incredibly helpful tool in your credit-building toolbelt, but it’s not a credit cure-all. It’s important to make two distinctions here about credit repair:

    1. Credit repair is not about improving your credit score—it’s about fixing your credit report. Ideally, credit repair will lead to improved credit standing, but no guarantees can be made. It is primarily about ensuring your credit report is 100% accurate and fair and every item is verified and substantiated.
    2. Credit repair is not used to remove correct negative items. This is a common misconception and often the source of misaligned expectations between consumer and credit repair service. Credit reporting agencies are obligated to remove or correct any information you can prove is inaccurate. However, they will not remove any negative information that is reported on accurately.

    The Steps to Repairing Your Credit

    In reality, there are just a few basic steps to credit repair.

    • Review your credit report for inaccurate negative information.
    • Dispute those items with the responsible credit reporting bureau and original creditor.
    • Negotiate next steps with the agency and conduct further credit analysis.

    The catch is that each step can be time-consuming and labor-intensive. Combing through your credit report and spearheading disputes can be a full-time job on its own! You’re busy enough as it is, so why not hand this off to someone else so you can focus on what really matters?

    Once an incorrect item has been identified on your credit file, it’s time to initiate the challenge/dispute process. Either you or the company you hire can do this, and it entails four basic steps:

    1. Contact the credit reporting bureau.
    2. Submit a formal dispute notice.
    3. Supply any necessary documentation.
    4. Review the response and follow up as necessary.

    One big thing to remember: The credit repair process also involves working with any supplier of incorrect information. If the original creditor who reported the incorrect information isn’t looped in, they may re-report the information and it’ll reappear on your credit report—forcing you to go through the arduous credit repair process all over again. Many do-it-yourself credit repairers have learned this the hard way. And most creditors don’t make it as easy to contact them about disputes as the credit bureaus do. This is one part of the credit repair process that can be especially difficult without the help of a credit repair agency.

    Once served with a dispute notice, the credit bureau has 30 to 45 days to respond. This is a legally mandated timeframe. At the end of this timeframe, the agency must either remove or correct the negative item that is proven to be inaccurate.

    According to, most clients use their services for an average of six months. Unique personal factors often affect the time it takes to see results. And remember, this isn’t necessarily a timeframe in which you should expect to see changes to your credit score. Credit repair may or may not improve your score, and it may take more time to see those results.

    Working with a Credit Repair Company

    A credit repair company can be a big help to you during the credit repair process. While you can take steps yourself, a credit repair agency will have the experience and resources required to get the job done right. Such services can bring a few key benefits to the table:

    • Time and professionals committed to your case.
    • Expertise in and experience with credit repair.
    • Existing relationships with credit reporting agencies.
    • Secondary services (e.g., consultation, credit monitoring or analysis).
    • Case intake, escalation and litigation.

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    These are organizations built specifically to conduct credit repair for consumers, taking on the burden of reviewing, disputing and following up. That’s a lot of work—especially when you consider the potential number of mistakes on your credit report. found that new customers in 2018 challenged 28 items on average.

    A credit repair service trains employees to deftly navigate the dispute and resolution process for you. They may also be able to provide resources and tools to help you build your credit and make better financial decisions in the future.

    How to Hire a Reputable Credit Repair Company

    Your credit score and the information on your credit report are incredibly personal. Before you share that information with just anyone, you want to know you can trust them. While there are some sketchy credit repair “companies”—just like in any industry—there are more good apples than bad. In fact, credit repair is a highly regulated industry. Understanding those regulations can help you determine whether a credit repair agency is worth working with.

    The Credit Repair Organization Act (CROA) establishes specific guidelines that credit repair companies must adhere to:

    • Credit repair companies cannot demand advance payment.
    • Companies must send contracts and a consumer rights disclosure in writing.
    • Consumers are granted certain protections and contract cancellation rights.

    If a company requires you to pay up front or fails to provide contract details, look for an alternative credit repair agency to work with. Other red flags to be on the lookout for include the following:

    • Guaranteeing improved credit.
    • Avoiding questions and being vague on details.
    • Holding back or misrepresenting information.
    • Asking you to misrepresent your personal information to manipulate or scheme the process.
    • Not disclosing your consumer rights to you.

    When you get close to making a decision, focus on the culture and identity of the credit repair company. Do you get the impression they appreciate and listen to personal aspects of your story? Be sure to find a company that will act like a partner and frequently communicate and collaborate with you on strategy.

    Alternatives to Credit Repair

    If the information on your credit report is accurate, credit repair likely isn’t the right strategy for you. You should focus instead on alternative strategies for improving your credit situation. Knowing what goes into a credit score is square one. Five basic elements make up your credit score:

    Understanding those elements and taking steps to build your credit are the best ways to improve your credit score—whether done on their own or in tandem with credit repair efforts. Once you understand the basics of what affects your credit score, check out our Free Credit Report Card for more information on your credit score and how you can improve it.

    Repair Your Credit Today

    While credit repair isn’t nearly as complicated as some myths make it out to be, it certainly does take time and effort to be done successfully. While you may want to repair credit yourself, consider the advantages of hiring a dedicated company. This is a prospect you’ll especially want to consider if you suspect several inaccuracies are present on your credit report.

    Ready to take the next steps in repairing your credit and want to hire a credit repair company? We know a couple names you can trust: Lexington Law or Read our reviews to find the right credit repair company to work with.

    Disclosure: and are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.

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