Should You Use a Credit Repair Service?
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If you’ve been trying to build your credit score, you may be considering hiring a credit repair service to help. These companies aim to build your credit by disputing outdated or incorrect information on your credit reports, following up on results and monitoring to be sure errors don't reappear.
Credit repair can cost around $100 a month and take several months — with no guarantee that your credit score will be higher at the end.
Note that credit repair can’t do anything that you can't do on your own, and it can't remove negative marks from your credit reports if they're accurate, timely and verifiable.
Is credit repair legal?
There are legitimate companies providing credit repair services, but the field is also known for scams, so it’s important to vet any company you're considering hiring.
In 2023, the Consumer Financial Protection Bureau reached a $2.7 billion settlement with major credit repair companies — including Lexington Law and CreditRepair.com — that illegally charged for their services in advance. Federal law says that credit repair companies that market their services over the phone must wait six months after proving to consumers that they delivered results before collecting payment.
The settlement will ban the companies from telemarketing their services for a 10-year period. Over 4 million consumers were affected, and the CFPB announced in December 2024 that it would distribute $1.8 billion to eligible parties.
The Federal Trade Commission warns against using credit repair services that guarantee they can remove negative information that's accurate or say they can help you establish a new identity using a credit privacy number.
The Credit Repair Organizations Act requires companies to provide you a firm total on costs and an estimate of how long it will take to get results. It also gives you three business days to cancel services without charge.
A reputable company should coach you on how to handle your existing credit accounts in order to avoid further damage. In addition, a reputable company won't guarantee a certain result or encourage you to lie.
What can credit repair services do?
Legitimate credit repair services check your credit reports for information that shouldn't be there and dispute it on your behalf. Many of them also check to be sure the information doesn't reappear.
When information on your credit reports is disputed, credit bureaus have 30 days to investigate. However, they don't have to investigate disputes they deem “frivolous.”
Among the errors that can be addressed:
Accounts that don't belong to you.
Bankruptcy or other legal actions that aren't yours.
Misspellings, which may mix in negative entries that belong to someone with a similar name — or may mean positive entries aren't showing up when they should.
Negative marks that are too old to be included.
Debts that can't be validated and verified.
How much does credit repair cost?
You pay a monthly fee to the credit repair service, typically from $69 to $149, and the process may take several months to a year. You may pay a setup fee to begin, as well.
Credit repair services sometimes come in tiered packages, adding related services, such as credit monitoring or access to credit scores, to the higher tiers.
How can I repair credit myself?
Start by checking your credit reports from the three major credit reporting bureaus — Experian, Equifax and TransUnion — by using AnnualCreditReport.com. You have access to free weekly credit reports from all three bureaus. Then follow these steps:
Dispute errors on your credit reports directly with the credit bureaus. All three bureaus have an online dispute process, which is often the fastest way to fix a problem.
Look for information that's accurate but can't be substantiated. Unverifiable information has to be removed, although it may be reinstated if it's verified later. An example might be a debt to a retailer that's now out of business; unless the retailer sold the debt to a collection agency that can show ownership, it might be unverifiable.
Work on your payment history. Your record of paying bills on time is the most important factor affecting your credit score. Missed payments can drag down your score.
Use less of your available credit. How much of your available credit card limit you're using is known as your credit utilization ratio. The lower it is, the better for your score. If you can afford to, consider making multiple small payments during the billing cycle, as well as other strategies to lower credit utilization.
Whether you’re repairing your own credit or paying a company to do it for you, it's smart to have a plan for building and maintaining your credit going forward.
