While you have the ability to repair your own credit, using a reputable and professional credit repair company is an option—if you can afford it and can verify that the company is legitimate.
What Is Credit Repair?
The Fair Credit Reporting Act gives you the right to an accurate credit report, allowing you to dispute credit report information that’s inaccurate, incomplete, or cannot be verified. Credit repair is the process of removing this type of information from your credit report with the goal of improving your credit score. Credit repair companies dispute information on your behalf to do so. One in four consumers has an error on their credit report that could affect their credit scores, according to the Federal Trade Commission. These errors can make it more difficult to get approved for credit cards and loans, and can negatively impact interest rates and terms. Credit repair can help you remove:
Accounts that aren’t yours Late payments that were really on time Wrongly reported balances Negative information outside the credit reporting time limit Information that can’t be verified
How Can Credit Repair Help Your Credit Score?
Credit repair helps your credit score by removing negative items that drag it down and are inaccurate. For example, a 90-day late payment reported in error could decrease your score by 100 points. While you have the right to dispute credit report information with the credit bureaus on your own, working with them isn’t always easy.
How Much Do Credit Repair Companies Charge?
Legally, credit repair companies can’t charge fees until after they’ve performed services for you. You’ll find that many credit repair companies charge a monthly subscription fee to cover the costs of work done for you in the previous month. Your total credit repair costs will vary depending on the company you choose and the amount of time you’re enrolled. To give you an idea, here are fees charged by a few credit repair companies.
How To Find a Reputable Credit Repair Company
While some credit repair companies employ shady tactics, like offering credit accounts (tradelines) or credit privacy numbers (a nine-digit number formatted like a social security number), there are also reputable companies that abide by the law to get results. Check for signs that the company is legitimate. Credit repair companies must follow the Credit Repair Organizations Act, which requires them to inform you of your right to repair your own credit, prohibits upfront payments, and gives you the ability to cancel your contract within three business days. Any company not following this protocol is one to avoid. A professional website with complete service and pricing information, a business address, and a customer service number are also things to look for. Before choosing a company, compare plan details, online reviews, and Better Business Bureau complaints against other credit repair companies. And check to see which ones offer a legitimate guarantee. It’s safer to trust a company that’s willing to refund your fees if it doesn’t deliver.
Alternatives To Paying for Credit Repair
If you don’t have the budget for credit repair—or you’d rather spend that money paying down high balances—you can repair your credit yourself. Many consumer advocate groups advise against using credit repair companies because of the number of dishonest actors in the industry. “Most credit repair companies are scams. Do it yourself for free instead. And if the credit bureau won’t correct an error, file a complaint with the Consumer Financial Protection Bureau or contact a lawyer,” wrote National Consumer Law Center attorney Andrew Pizor in an email to The Balance. If you choose to go the DIY route: The credit bureau will investigate your dispute and update your credit report based on the results. Working with a nonprofit consumer credit counseling agency is another worthwhile and cost-effective option. The agency can help review your finances, create a budget, and negotiate a debt management plan with your creditors to help you get caught up on any past-due bills. You can find a reputable agency through the National Foundation for Credit Counseling.
