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If you’ve had it up to HERE with bad credit wreaking havoc on your life, you might be considering credit repair. 

Trouble is, you’re a bit sketchy about the whole thing, and you’ve got some questions. That’s a good thing. The credit repair industry has many dodgy players and many outright scams. It’s good to be skeptical and it’s good to wonder whether you really need to hire a credit repair company.

That doesn’t mean credit repair is completely useless or that you should avoid it under all circumstances. Some companies are legitimate. Some have a strong track record of improving the credit scores of their clients.

So how can you decide whether to use a credit repair company? Start by understanding how these companies work and what they actually do.

👉 Do you need a credit repair company? In most cases, it only makes sense to retain a credit repair company if you have a significant number of negative entries on your credit report. If the damage is being done by a few accounts a DIY approach might serve you better.

How Do Credit Repair Companies Work?

Credit repair companies provide a service. Their customers are people who have low credit scores and want higher ones. These customers pay the company to try to raise their credit score. We say “try” because there is no guarantee that they will succeed.

Credit scores are based on your credit reports. Your creditors report your accounts to one or more of the three major credit reporting bureaus: Experian, Equifax, and TransUnion. These companies assemble this data into credit reports. Credit scoring companies, like FICO and VantageScore, use the information in these reports to calculate your credit score.

If your credit score is lower than you’d like it to be, you may have entries in your credit record that harm your score, like late payments, charge-offs, or collection accounts. You may also have errors in your credit report.

If you hire a credit repair company, they will focus on removing errors or inaccurate entries from your credit report. Understanding how they do that is an important part of making the decision to hire a credit repair company.

What do Credit Repair Companies Do?

Credit repair companies do exactly the same things that you would do for yourself if you chose a DIY approach. Most of the honest ones will admit that. What they offer is a professional service that they claim will do it faster and more effectively than you could do it yourself.

This is what a credit repair company will do.

The best companies pull your reports from Experian, TransUnion, and Equifax, and review them meticulously, line by line. They’ll look for negative information that’s dragging down your score. Things like:

  • Late payments
  • Charge-offs
  • Bankruptcy

The goal is to identify negative information that’s crippling your score and review it with you carefully, searching for any signs of inaccuracy. 

Inaccuracies that could harm your score:

  • Incorrect loan amounts
  • Incorrect payment history 
  • Tradelines that don’t belong to you 
  • Tradelines that should have been removed

If they do find a suspected inaccuracy, credit repair companies take immediate action to dispute the error and get it removed from your report.

Credit Repair Companies Dispute Inaccuracies So You Don’t Have to

Can you review your own credit reports and dispute any inaccuracies you find? Absolutely!  Learn more about how to read a credit report or file disputes yourself.

But if you’d rather do… well, anything else, a credit repair company can handle the nitty-gritty so you don’t have to. 

Once they’ve identified possible inaccuracies, they will file disputes with the credit reporting agencies on your behalf.

☝️ The credit reporting agency has to prove a disputed debt belongs to you. If they can’t, they’ll have to remove it.  

Credit Repair Companies know how to draft dispute letters. They know what documentation to request from you, and they know how to get it done fast. That’s why having them handle it is easier (although more expensive) than going it alone.

The Best Credit Repair Companies Take it One Step Further

Removing inaccuracies from your credit report can have a surprisingly large impact on your score. But the best ones take it one step further by providing advice for improving your credit score. 

This is tailored to the individual, based on the details of their credit reports. But examples might include:

  • Paying off and closing certain loans.
  • Keeping credit utilization at a specific level.
  • Negotiating a repayment plan.
  • Applying for secured credit.
  • Using a credit-builder loan.

👉 These steps won’t remove negative entries from your credit report, but they will dilute their impact by adding positive entries (if you manage the accounts or payment plan responsibly).

The Big Thing Credit Repair Companies Say They Can’t Do (Or Can They?)

Credit repair companies go through your credit reports, dispute inaccuracies on your behalf, and get mistakes deleted.  They can give you advice on how to boost your credit score. 

There’s one big thing they “say” they can’t do: They say they can’t remove legitimate debt from your credit report. 

 … or can they?

Even if you have a debt you’re pretty sure belongs to you, credit repair companies can still dispute it, and they’ll do it legally.  

The law protects you from negative items on your report that are not yours, so if you aren’t 100% sure about all the details on your report, the repair company will likely want to send a letter to confirm it’s really yours. In some cases, they may dispute an account even if it is yours.

The credit bureaus must respond within 30 days proving the item belongs on your file, or they must remove it.  

In some cases, a creditor may be unable to verify that a debt is yours. If a collection account has been sold from one collection agency to another there may be key data missing from the record. Some creditors may fail to respond to a verification request.

If this happens, the credit bureau may be forced to remove even a legitimate debt.

This is how credit repair companies legally get items removed from credit files. Just remember that there is no assurance that this method will succeed. If the credit bureau verifies your debt it will not be removed. They do not have to provide an original signed contract or any similar document.

⚠️ A credit repair company cannot promise to remove legitimate debts from your record. If they make that promise they are breaking the law and you are being scammed.

How Long Does It Take?

Credit repair can have very different outcomes for different people. A great deal will depend on your individual credit situation.

If your credit problems are caused by verifiable errors on your credit report, you may see a very quick increase in your score as the entries are deleted.

If you’re relying on adding positive records to improve your credit, you may have to wait longer. Creditors report to the credit bureaus on their own schedules, and the new information won’t be added to your record until they report. New accounts may not have a significant impact on your score until you’ve established a payment record.

I improved my credit score by over 100 points in the first 60 days when I started my credit journey. I was super aggressive and used a combination of repair and credit building tools, including credit repair services, online store credit cards like Fingerhut, and authorized user tradelines. 

There’s no assurance that anyone else will get the same results. If there are no errors on your credit report and you are unable to get any negative records removed, you may see much lower and slower results.

Why Not Do it Yourself?

I like the idea of not spending money and fixing my credit on my own without any help. 

The problem with a do-it-yourself strategy is that you probably don’t know enough to do it properly. 

I don’t care how many of these articles you read. The bottom line is that there are people who do this for a living because figuring this stuff out is a full-time job.

A Professional View

Jason Kaplan, Attorney-at-Law and the Owner of The Credit Pros explained how the credit bureau dispute system works and why you have to be careful about the language you choose in dispute letters.’

When the credit bureaus receive a dispute letter they assign it a three-digit credit bureau code based on the language used in the letter. “If the dispute does not correlate to a specific code, the dispute will be bucketed into a catch-all category, and the tradeline will have a lesser chance of deletion“, Kaplan stated.

If a dispute is denied, where you start depends on several factors“, Kaplan explained. For instance, “Was the debt verified with documentation and if so is the documentation provided in line with Federal Trade Commission guidelines and state law?” Or maybe, “Was the dispute deemed frivolous, and if so, what did the creditors or credit bureaus use to decide arbitrarily?

These are just a few of the questions that have to be asked after a credit dispute is denied.

Mr. Kaplan further told us, “There are specific judicial decisions that will apply depending on your jurisdiction. Has the denial decision been covered in subsequent settlement agreements like the one in 2015 between the New York Attorney General’s office?

All of these questions and many more will determine whether it’s worth continuing the dispute process.

👉 If you have a thin credit file with a small number of problematic accounts, or if there’s a clear and verifiable error on your credit report, DIY is probably the best (and certainly the cheapest) way to go. If you have a more complex credit report with a larger number of issues, professional assistance might be worth the cost.

How Much Does Credit Repair Cost?

The cost of professional credit repair will vary with the complexity of your case and the company you choose to engage. A recent survey of 500 credit repair users gives some idea of the cost you’re likely to face.

  • 31% of respondents said the lifetime total of all monthly fees, start-up costs, and additional fees was between $250 to $500 (most prevalent answer).
  • 17% said their lifetime total was less than $250.
  • 32% of respondents spent over $750 on credit repair services.  Of these big spenders, 48% reported a credit score gain of 100 points or more.

Remember that Federal law prohibits credit repair companies from charging upfront fees or making unrealistic promises. They have to do the work before billing you. If you’re considering credit repair you may wish to learn more about the Credit Repair Organizations Act, which regulates credit repair companies.

Wrapping Up

Credit repair companies don’t offer anything you can’t accomplish with a DIY approach. 

You can pull your credit reports for free, review them in painstaking detail, and dispute suspected inaccuracies with the credit bureaus until you get results. 

But let’s be honest: a reputable, legitimate credit repair company will do it better and they do it faster.  And for some people, that’s worth the price. You just have to avoid the scammers and choose the right company.

If you’re interested in working with a professional to clean up your credit report, check out our list of the best credit repair companies.