How To Choose a Credit Repair Company

Picking a credit repair company can be tricky, largely because scams are common in the credit repair business. When choosing a credit repair company, check the company’s reputation, ask questions, and fully understand the terms to avoid scams. Learn more about how credit repair companies work and how to choose a credit repair company that meets your needs.

How To Use a Credit Repair Company

A credit repair company is a for-profit business that works with paying consumers to remove incorrect negative items from credit reports. Consumers often seek out credit repair companies when they want to boost their credit score ahead of applying for credit, such as a mortgage, car loan, or credit card.

In many cases, you can do the same work a credit repair company does on your own. Some experts believe you should save money by disputing negative, incorrect items on your credit reports instead of hiring a credit repair company. You can file your own disputes with the three major credit bureaus: Equifax, Experian, and TransUnion.

To sign up for credit repair services, you’ll need to:

• Select the company: Choose the company based on factors such as its reputation and fees. To check out a company’s reputation, visit the Better Business Bureau website and Trustpilot review website, comb through news reports, and look for consumer complaints.
• Sign a contract with the company: All contracts with credit repair companies must be in writing. The contract should explain what your legal rights are, what services the company is providing, how much you’ll pay for the services, how long it will take to achieve results, and how you can cancel the deal at no cost within three days.
• Be prepared to pay the company: Methods that credit repair companies charge for their services include monthly subscriptions, flat fees, and “pay per deletion” fees. You may end up paying hundreds or thousands of dollars for the company’s services. These companies aren’t legally allowed to charge upfront fees.

When Is It a Good Idea To Use a Credit Repair Company?

Credit repair companies’ services focus on disputing incorrect information on a credit report, but keep in mind that you can complete that work for free. Some people may still prefer to use a credit repair company. This service may benefit you if you’re:

• Not confident about dealing with credit bureaus on your own: Experts at reputable credit card companies are educated about credit laws, credit reports, credit disputes, and other aspects of removing negative marks from your credit history.
• Short on time: A credit repair company can shoulder the time-consuming burden of communicating with credit bureaus and filing disputes. Remember that anything a credit repair company does legally is something you can do without their help.

Credit repair companies also have several downsides to consider. They include:

• High price: It can cost hundreds or even thousands of dollars to use repair services. In many cases, you can handle the same tasks on your own without paying a penny.
• No guarantees: Credit repair companies are prohibited from promising specific results, such as seeing a lift in your credit score.
• Scams: Some credit repair companies prey on vulnerable consumers. For instance, they might falsely claim they’re able to remove negative but accurate information from your reports. Only information that’s proven to be incorrect can be taken off a credit report.

What You Need To Use a Credit Repair Company

To use a credit repair company, you’ll need to:

• Sign up for the company’s services.
• Sign a contract with the company.
• Provide personal information so that the company can review your credit reports and file disputes with credit bureaus.
• Make payment arrangements. The company might charge a monthly subscription fee or a flat fee, for example.

Choosing a Credit Repair Company

Be careful when you choose a credit repair company to ensure the company is legitimate and can meet your needs. Here are some tips for choosing a reputable credit repair company:

• Look online for reviews and complaints about credit repair companies that you’re considering.
• Weed out any companies that have a demonstrated history of scamming consumers.
• Compare fees among providers of credit repair services.
• Find out about the company’s expertise with credit repair, including the kind of training its professionals receive and how long the company has been in business.
• Ask whether any services will be outsourced to another company.
• Find out which items on your credit reports will be disputed.
• Ask how long the credit repair process will take.
• Be suspicious if a company makes any promises that seem too good to be true.

Key Terms & Concepts

When you’re shopping for a credit repair company, be highly on guard for scams. Signs that a company might be engaging in bad behavior include:

• You’re being pressured to pay upfront fees. Credit repair companies can legally only charge for services that they’ve provided.
• You’re being promised that all negative information can be wiped off your credit reports. Only information that’s inaccurate can be erased from your credit reports.
• You’re being instructed to dispute both accurate and inaccurate items on your credit reports.
• You’re being told not to contact any of the credit reporting agencies (Equifax, Experian, and TransUnion) on your own.
• You’re not being informed of your rights.

Alternatives to Credit Repair Companies

Credit repair companies aren’t the only organizations that can help you improve your credit. Among the alternatives are:

• Nonprofit credit counseling agency: A nonprofit agency can help put your credit on the right track by advising you on handling your debts and coming up with a plan to pay off your debts, among other services.
• Do it yourself: Rather than hiring a credit repair company to correct inaccuracies on your credit reports, you can get free copies of your annual credit reports, look for errors, and dispute any wrong information. Get a free copy of your report from AnnualCreditReport.com.
• Debt settlement company: Debt relief companies aim to negotiate with creditors or debt collectors to reduce your debts, which might lead to improvements in your credit reports and credit scores. However, debt settlement companies often charge high upfront fees and may overpromise on what they can deliver. Their services can also have a negative impact on your credit score.

Frequently Asked Questions