Credit repair companies help clients review their credit reports and correct or remove inaccurate negative items to help improve their credit scores.
Derogatory marks on your credit report can significantly lower your credit score. When your score is lower, it can be more difficult to get loans and can increase your interest rates. What’s worse is that a negative mark may actually be an error on your credit report. This is why credit repair companies can be so helpful.
Credit repair companies challenge errors on your credit report on your behalf. Even though you have the right to a fair and accurate credit report, it can take work to get credit bureaus and creditors to appropriately address errors, which is why it’s helpful to have a credit repair company on your side that can help you fight for your consumer rights.
We’ll go over how these companies work, how much they cost and how to find the best one for your credit needs to help you feel confident rebuilding your credit.
Table of contents
A credit repair company is an organization that can help you repair your credit by analyzing your credit reports and challenging inaccuracies with credit bureaus and creditors. They have the experience and knowledge to tackle credit issues that could be difficult for you to resolve on your own.
This expertise makes the credit repair process easier for customers, as these companies understand the process needed to fix inaccuracies and know what clients are legally entitled to request from both credit bureaus and creditors.
Credit repair companies focus on individuals’ credit situations and can help get inaccurate negative marks removed from credit reports, whereas credit counseling agencies are often nonprofit organizations that advise people about debt and finance management. Credit counseling agencies may help you with things like reassessing your budget or getting your credit card interest rate lowered. It’s up to you to decide which kind of service is better for your needs, a credit repair company or a credit counseling agency.
These companies typically start with a request to review your credit reports from the major credit bureaus (TransUnion®, Experian® and Equifax®). They’ll then create and execute a plan to address any discrepancies and recommend additional ways to make your credit report as accurate as possible.
Each company’s methods and steps vary, but we’ll break down what you can generally expect from most credit repair companies.
When reviewing your credit report, the best credit repair companies will look for errors like:
Accounts that don’t belong to you
Duplicate accounts
Incorrect inquiries
Inaccurate accounts
These inaccuracies can take a toll on your credit score. Credit repair companies know what to look for and can save you the time and effort needed to review each report line by line.
Next, credit repair companies challenge all of the errors found on your credit reports. By submitting a challenge, you’re requesting the credit bureau review the accuracy of the information on your credit report. The bureaus are required to either correct or remove it if they’re unable to verify it.
These companies can help you by identifying and gathering the evidence needed to properly challenge or dispute these errors. They also help you manage and craft correspondence with the credit bureaus and creditors.
Costs vary between companies and are often different based on the number and type of services you’d like. For example, many companies offer multiple tiers, and the top tier has more individual services and is the most expensive.
Payment for credit repair can range from a one-time flat rate to charges for each inaccuracy found to monthly payments. However, the Credit Repair Organizations Act states that credit repair companies are not allowed to request or receive payment until services are being or have been completed.
Despite the cost of working with a credit repair company, you may end up saving in the end after your credit has improved, leading the way to lower interest rates and more options for things like auto or personal loans.
Spending time and money to repair your credit with a credit repair company can potentially save you thousands in the end, depending on your situation.
You can find the best credit repair companies by asking the right questions, looking up reviews and understanding what they legally can and cannot do. Doing your research beforehand can save you time, money and unnecessary stress.
The best credit repair companies are going to have some common characteristics. When choosing a company, keep in mind your specific credit situation because their services may vary. For example, you may realize you need some financial education to maintain good credit, so you might be willing to pay a little more for that service as part of your plan.
Some good signs of a credit repair company include:
Good customer reviews: Reviews from current and former customers are a good indicator of quality and customer service.
Experience: More years in business means more experience repairing credit.
Number of clients helped: Some companies state on their website how many negative marks they’ve removed and how many clients they’ve helped.
Average score increase: It’s helpful if the company states the average score increase they see for clients. However, every person’s situation is different, and credit repair companies cannot guarantee removals or score improvement.
Comparable pricing: Paying a little more for additional services makes sense, but a reliable credit repair company should charge a similar amount to other comparable companies.
Red flags to look out for
Now that you know how to find legitimate credit repair companies, it’s just as important to know what red flags to look for:
Demands payment up front: As mentioned, this is illegal and you should not pay up front unless services are being completed.
Sounds too good to be true: Promising to get rid of negative items, especially if they’re accurate, may indicate that the company is illegitimate. Another red flag is the claim that a company can increase your score an exact amount, especially if it’s within a short time frame. All guarantees of performance must be in writing. A guarantee that isn’t in writing is in violation of the Credit Repair Organizations Act.
Can’t answer questions: If the company can’t answer specific questions about their services or prices, it may be a sign that the company is illegitimate.
Withholds information or provides misinformation: The company should inform you about the rights you have as a customer, like your right to cancel your contract with them within three business days without being billed.
Asks you to misrepresent information: The top credit repair companies will not ask you to misreport or otherwise misrepresent yourself or your information.
Yes, you can repair your own credit, but it’s important to make sure you’ve done the proper research. As mentioned, a major benefit of credit repair companies compared to DIY credit repair is their knowledge and experience.
You can do anything that a credit repair company does. For example, you can contact the credit bureaus directly.
However, repairing your credit without the help of a credit repair company or financial expert can be futile if you haven’t done your homework. There are many things you can easily miss if you don’t have the experience or knowledge that they provide.
If, for example, you submit a dispute with the credit bureaus, it may get denied for not providing enough information to prove your case. This can happen even if you’re in the right.
The time it takes to see the results from credit repair varies based on your current score, your financial situation and how many negative marks you’re challenging.
For example, a person with a few simple inaccuracies on their credit report may see their results sooner than someone who has multiple complex inaccuracies that require lots of correspondence. However, results vary greatly.
The credit bureaus are required to correct or remove any inaccuracies usually within 30 – 45 days of a dispute being submitted, according to the Fair Credit Reporting Act. However, it still may take longer than this depending on the situation.
Yes, a legitimate credit repair company can help you remove inaccurate negative items that are damaging your credit. One of the best ways to see if this is the best option for you is to start with a consultation or assessment. That way, you can get a better idea of how the credit repair company may be able to help you with your credit needs.
f you’re interested in getting started, contact us to get your free credit report assessment today and learn more about our additional services.
For more information on how to upgrade your credit report and score call 818-484-8008.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice.
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