How to Choose a Credit Repair Company

Choosing a credit repair company can be difficult because credit repair scams are common. When choosing a credit repair company, check the company's reputation, ask questions and fully understand the terms and conditions 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 false negatives from their credit reports. Consumers often look to companies when they want to boost their credit scores before applying for credit, such as a mortgage, car loan or credit card.

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

To enroll in credit repair services, you will need:

• Select the company: Choose the company based on factors like reputation and fees. To check a company's reputation, visit and review the website, research news reports, and search for consumer complaints.
• Sign a contract with the company: All agreements with credit repair companies must be in writing. The contract should explain what your legal rights are, what services the company provides, how much you will pay for the services, how long it will take to get results, and how you can cancel the deal without paying anything within three days.
• Be prepared to pay the company: Ways credit repair companies charge for their services include monthly subscriptions, flat fees, and “pay-for-delete” fees. You can pay hundreds or thousands of dollars for a company's services. These companies are not legally allowed to charge upfront fees.

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

The services of credit repair companies focus on disputing incorrect information on your credit report, but remember that you can do this work for free. Some people may still prefer to use a credit repair company. This service may benefit you if you:

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

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

• High price: Using repair services can cost hundreds or even thousands of dollars. In many cases, you can handle the same tasks yourself without paying a dime.
• No guarantee: Credit repair companies are prohibited from promising specific results, such as seeing an increase in your credit score.
• Scams: Some credit repair companies prey on vulnerable consumers. For example, they may falsely claim that they can remove negative but accurate information from your reports. Only information that is proven to be false can be removed from a credit report.

What it takes to use a Credit Repair Company

To use a credit repair company, you will need:

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

Choosing a Credit Repair Company

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

• Look online for reviews and complaints about credit repair companies you've reviewed.
• Exclude companies with a history of consumer fraud.
• Compare fees among credit repair service providers.
• Learn about the company's experience with credit repair, including the training their professionals have received and how long the company has been in business.
• Ask if any services will be outsourced.
• Find out what items to dispute on your credit reports.
• Ask how long the credit repair process will take.
• Be suspicious if a company makes any promises that seem too good to be true.

Basic Terms & Concepts

When shopping, be very careful of scams. Signs that a company may be engaging in misconduct include:

• You are being pressured to pay down payments. Credit repair companies can legally only charge for the services they provide.
• It is promised that all negative information can be removed from your credit reports. Only inaccurate information can be removed from your credit reports.
• You are instructed to dispute both accurate and inaccurate items on your credit reports.
• You are told not to contact any of the credit reporting agencies (Equifax, Experian, and TransUnion) yourself.
• You are not informed of your rights.

Alternatives to Credit Repair Companies

Credit repair companies are not the only organization that can help you. Among the alternatives:

• Non-profit credit counseling agency: A nonprofit agency can help you get your credit back on track by advising you on managing your debt and developing a plan to pay off your debt, among other services.
• Do it yourself: Instead of hiring a credit repair company to fix inaccuracies on your credit reports, you can get free copies of your annual credit reports, look for errors, and dispute any incorrect information. Get a free copy of your report.
• Debt settlement company: Debt relief companies aim to negotiate with creditors or debt collectors to reduce your debts, which can lead to improvements in your credit reports and credit scores. However, debt settlement companies often charge high upfront fees and may overpromise what they can deliver. Their services can also negatively affect your credit score.

Frequently asked questions