What Are Credit Repair Services?
Credit repair refers to the process of working to fix or improve your credit. Credit repair services are companies you can pay to help you do this. These providers help you remove negative items from your credit report in exchange for a fee. They may assist you with tasks such as obtaining your credit report, contacting credit bureaus and creditors, and representing you in disputes and negotiations.
Credit repair services are not an easy way to boost your score quickly or a magical fix for a low credit score. Find out more about what credit repair companies do and how you can find legitimate professionals to help with such matters below.
In This Piece
- What Do Credit Repair Companies Do?
- What Is the Credit Repair Organizations Act and Why Does It Matter to You?
- Are There Legitimate Credit Repair Companies?
- How Do I Verify Which Credit Repair Companies Are Legitimate?
- Top Credit Repair Companies
- How Much Do Credit Repair Companies Charge?
- How Long Does Credit Repair Take?
- Advantages of Using Credit Repair Companies
What Do Credit Repair Companies Do?
Each credit repair company may approach the job in its own way, but some common things these professionals can do for you include:
- Reviewing your credit reports from the major credit bureaus—Equifax, Experian, and TransUnion—to identify errors or inaccuracies that could negatively impact your credit score
- Disputing errors on your credit reports, including challenging incorrect information such as outdated account information, incorrect account balances or inaccurate late payments
- Helping you develop a credit improvement plan by providing guidance on how to pay down debts, establish a budget or develop strategies to improve your credit utilization ratio
- Negotiating with creditors on your behalf, if possible, to make sure accurate information is updated or questionable negative information is removed from your report
- Educating you on credit management so you know how to build credit for the future, avoid common credit mistakes and maintain good credit in the long run
You may have noticed that credit repair companies don’t really do anything you can’t do yourself. The difference is that they may be able to do it faster or with more aggression and follow-through than you could. You may have a job and many other life obligations to attend to, and that can make it harder to follow up with credit report disputes or take the time to find good information about managing your credit. Working with a credit repair agency helps you do those things without spending as much of your own time.
What Is the Credit Repair Organizations Act and Why Does It Matter to You?
The Credit Repair Organizations Act, or CROA, is a federal law passed in 1996 that regulates the activities of credit repair organizations, including businesses that provide credit repair services.
Under the CROA, credit repair companies can’t:
- Make false or misleading claims about their services
- Charge advance payment for services
- Engage in certain other practices that may be harmful to consumers
The law also requires credit repair companies to provide written contracts that outline their services, the cost of those services and the timeframe in which services will be provided.
The CROA also helps protect certain consumer rights, including the right to cancel a contract with a credit repair agency within a certain period of time or sue a covered business that violates the law. Under the act, credit repair businesses must provide customers with a copy of consumer rights and other important information before providing any services.
The reason the Credit Repair Organizations Act matters to you is that it’s designed to help protect consumers from fraudulent or abusive practices by credit repair organizations. By understanding your rights under the law, you can make sure you’re better protected.
Are There Legitimate Credit Repair Companies?
You may have seen ads for companies that promise your credit score will see “a 100-point jump immediately!” Sounds fishy, right? That’s because it is. It’s illegal for a credit repair company to promise results like that and any company that does so is one to steer clear of.
The reason there’s a need for laws like the Credit Repair Organizations Act is because there are people who try to run scams, stealing information and money from others in the guise of offering credit repair services. However, there are definitely legitimate credit repair companies that offer realistic and helpful services for individuals who want help fixing their credit. Those include Lexington Law Firm and CreditRepair.com.
How Do I Verify Which Credit Repair Companies Are Legitimate?
If you’re thinking of going with a credit repair company, how do you go about finding a legitimate one? While many credit repair services are genuine, some aren’t. Here are some red flags to look for.
1. A Credit Repair Service Requires Payment Up Front
Under the CROA, credit repair companies can’t request or receive payment until they’ve delivered the services they promise. Some companies try to structure their monthly payment contracts to sidestep this regulation. However, any up-front payment requests or attempts are illegal. Any requests for advance payments should be a red flag to be wary of.
2. A Credit Repair Provider Guarantees to Remove Negative Information
No credit repair service can honestly guarantee in advance that they’ll be able to remove all negative items from your report. For one thing, some items may be accurate. No one can determine which items are disputable before seeing your report. If a provider guarantees they can remove negative information, it’s a warning sign that they’re running a scam.
3. A Credit Repair Service Asks You to Dispute Legitimate Information
You can dispute information that is inaccurate, unfair, or unsubstantiated. However, disputing accurate, fair, or verified information won’t help you, and it may get you in trouble. Some credit repair services may pressure you to dispute legitimate information because they’re trying to justify charging you a fee for removed items. Steer clear of this bad advice.
4. A Credit Repair Provider Fails to Advise You of Your Rights
Shady credit repair providers may avoid advising you of your rights or refuse to disclose your rights even when asked directly. The FCRA entitles you to dispute items in your credit report yourself without using a credit repair service. You also have a right to cancel any contract with a credit repair service for any reason within three days at no charge. If a credit provider fails to disclose these rights or avoids answering questions about the subject, consider them suspect.
5. A Credit Repair Service Discourages You from Contacting Credit Bureaus Yourself
You have a legal right to contact credit bureaus yourself. If a credit repair provider advises you against doing so, they may be discouraging you so they can keep your business to themselves. They also may be trying to conceal the results of their credit repair services if they’re not actually providing any. Look out for credit repair companies that try to keep you from contacting credit bureaus yourself. A good provider will help you work with credit bureaus, not keep you from them.
How to Tell a Legitimate Company From an Illegitimate One
Knowing how to tell a scammer or illegitimate credit repair company from legitimate services is another important way to protect yourself and your personal information. Here are some potential differences to look for.
| Illegitimate Credit Repair Company or Scammer | Legitimate Credit Repair Company |
| Makes unrealistic promises, such as repairing your credit overnight | Doesn’t make promises, because the reality is that there are no guarantees |
| Says it will boost your credit score by a specific amount, such as 100 points | Doesn’t speak in absolutes, because this is not realistic—instead, speaks about helping to clean up your credit report or better manage your credit history |
| Demands money—often a good amount of it—in advance of services | Bills for services or provides a reasonably priced subscription model that includes immediate access to information |
| Doesn’t provide you with information about services, your rights and how you can enforce those rights | Provides information about services, your rights and how you can enforce those rights in writing |
| Keeps you in the dark about what’s going on with your case | Provides transparency about how it’s working on your case |
| Obscures a lot of information online and there don’t seem to be a lot of contact methods for customer support | The business is easy to find online, has social media and other web presences and offers plenty of avenues for support |
Top Credit Repair Companies
So what are some of the top credit repair companies? Here are some that made our list:*
Recommended
#1 Lexington Law
#2 CreditRepair.com
#3 Credit Saint
#4 The Credit People
*Ranking information is based on a compilation of reviews from the following third-party review sites: Bestcompany.com, Credible.com, BadCredit.org, and TheCreditReview.com. Credit.com has examined each review on the third-party sites listed and compared those sites’ findings with the individual credit repair services’ websites to derive the Credit.com reviews shown here.
How Much Do Credit Repair Companies Charge?
The price of credit repair varies depending on the company, the state you live in, and what type of services you need. Before you sign a contract, be sure you understand what you’re signing up for, how much you’ll pay, and when you will be charged.
Note that under the Credit Repair Organizations Act, credit repair companies are prohibited from demanding advance payment. That means they can’t charge you before any work is completed.
How Long Does Credit Repair Take?
Getting negative and inaccurate information off of your credit reports is one of the fastest ways to improve your score. Since credit bureaus have to respond and resolve a dispute within 30 days—a few exceptions can extend this to 45 days—it’s a short timeline. The timeline is particularly important when consumers want to buy a house, get a new car, or open up a new credit card and don’t have time to wait to build good credit organically.
That doesn’t mean a credit repair company can tell you exactly when your credit score will improve. Some consumers’ credit issues are more complex than others. There’s never a guarantee when it comes to credit.
Advantages of Using Credit Repair Companies
Why would you want to use a credit repair company instead of trying to fix your credit yourself? There are several advantages to using a professional credit repair service instead of trying to go it alone. Consider these benefits when weighing the decision to go with a credit repair service.
1. Using a Credit Repair Company Can Save You Time and Effort
One of the biggest benefits of using a credit repair company is that it can be quicker and easier than trying to repair your credit on your own. Repairing your credit can require a significant time investment to obtain your credit report, review it for disputable items, contact credit bureaus and creditors, and negotiate disputes. A credit repair service can handle this for you, saving you time and energy better invested in other activities. Moreover, credit repair companies may be able to help you work to fix your credit faster than you could on your own.
2. Credit Repair Providers Are Experienced Professionals Who Can Catch Mistakes You’d Miss
Another big advantage of using a credit repair service is that you’re gaining the support of experienced professionals. With their experience, they can help you spot disputable items on your credit report which you might overlook on your own. They can suggest effective strategies for disputing items and actively assist you in implementing them. They also can advise you against strategies that aren’t likely to be effective.
3. Credit Repair Companies Can Help You Learn How to Maintain Credit Health
As experienced professionals, credit repair providers not only can help you work to repair your credit, they can also assist you with maintaining your credit health going forward. Using their expertise, they can offer steps you can take to improve your credit. They also can provide monitoring and alerts to help you proactively respond to events that threaten to lower your credit score, such as late payment complaints or identity theft.
Affiliation disclosure: John C. Heath, Attorney at Law, PC, dba Lexington Law Firm contracts with Progrexion Holdings, the owner of Credit.com, to provide administrative and business support. Credit.com may receive compensation if a subscriber signs up for Lexington Law Firm services.
