Do credit repair services really work and how do you find the best one?
If you’ve already done any research about credit repair, you might be concerned about getting scammed. Credit repair services have a pretty bad reputation, even as far as financial services go. In fact, the industry is so prone to scams that the Better Business Bureau doesn’t even rate credit repair companies. But does that mean that credit repair is bad? And if not, how do you find a reputable company to help you?
Credit repair is a legitimate, legal process
Credit repair, itself, is completely legal in all 50 states. The Fair Credit Reporting Act (FCRA) is a federal law that establishes consumer rights to correct credit reporting mistakes. You might trust that the credit bureaus maintain accurate, error-free consumer credit reports. However, mistakes occur more often than you’d think.
An FTC study found that 1 in 4 credit reports contain an error that would damage that consumer’s credit score; 1 in 20 had a mistake that would decrease their score by more than 25 points.
That’s why the FCRA gives people the right to dispute these mistakes to have them removed. If you ask a credit bureau to verify a negative item and they can’t, it must be removed. This is credit repair. And it’s a vital process, because lenders look at your credit to making financing decisions.
Credit repair services are legal, too
There’s another federal law that gives consumers the right to get professional credit repair services. It’s called the Credit Repair Organizations Act (CROA). This law defines how you can authorize a third-party to make credit report disputes on your behalf. It basically gives you the right to hire someone to do the work for you. But only certain people are legally allowed to provide these services!
A credit repair company must have an attorney licensed to make credit report disputes in the state where you live.
If a company has a state-licensed attorney that you authorize to make disputes on your behalf, then credit repair services are entirely legitimate. If they don’t, then that company legally can’t provide the service that you hire them to do.
Separating legal credit repair services from credit repair scams
The first question you should ask to separate legitimate credit services from scams is whether they have state-licensed attorneys. Legitimate credit repair companies either have a staff of attorneys that are licensed to work in all states or they only provide services in one state. Doing a search for “credit repair services near me” usually connects you with legitimate credit repair services because it puts you in touch with a local credit repair attorney.
The second way to separate a legitimate service from a scam is the kind of guarantees they make. Credit repair is not designed to improve your credit score! Correcting mistakes in your credit report can improve your score. But it’s more of a happy side effect. You repair your credit to correct mistakes in your credit report. If that improves your score (and it often does), great!
However, a company cannot guarantee that credit repair will improve your score by 100 points. They can’t even make guaranteed offers to remove all the negative items in your report. In fact, until they have seen your credit report, they really can’t guarantee they can even help you! If a negative item is correct and verifiable, then it can’t be removed. In this case, you must wait for the penalty to expire naturally.
So, if a company guarantees to raise your credit score by a certain amount, it should be a red flag. They can say they’ve raised their customers’ scores by X points, on average, but that’s the strongest claim they can make. Really. Any guarantees that a credit repair company makes should be money-back guarantees. In other words, if they don’t deliver what they promised, then you don’t pay.
Finally, you should look online for independent credit repair reviews of any company you find. Don’t just trust the testimonials on the company’s website. Companies won’t show you their negative reviews; they’ll always put their best foot forward. That means need to check independent reviews, consumer reports and rip-off reports. It’s the best way to you’re using reputable credit repair services.
Debt.com only works with accredited credit repair companies that we’ve personally vetted. If you need professional credit repair, we’ll connect you with the best!
How do credit repair services really work?
The process is the same as it is if you do the work yourself. There’s nothing professional, reputable credit repair services do that you can’t do yourself. You’re basically just hiring someone to do the legwork for you.
- You authorize the company to review your credit reports – a good service checks each report from each credit bureau.
- They specifically look at the negative items in your report that decrease your credit score.
- This includes things like missed payments, collection accounts, charge-offs and public records like bankruptcy or foreclosure.
- They review the items they identify with you to determine what’s accurate and what’s not.
- Then they dispute any inaccurate information with the credit bureau that issued the report.
- The credit bureau has 30 days from the date a dispute was received to verify the information with the original issuer.
- Any item that cannot be verified must be removed.
- Once the items are removed, the bureau sends you a new copy of your credit report so you can confirm it’s gone.
Again, this process will remove any negative items that can’t be verified. But it’s not guaranteed to completely clean up your credit. Any verified items will remain on your report until they expire. The credit repair company may give you tips on how to build credit to offset any items that remain.
Credit Repair Service Questions and Answers
Q: Are there fast credit repair services?
A: Credit repair, in general, is not a slow process. Reviewing your reports only takes a few hours at most, even if you have many negative items. Then it’s another few hours to write and send the dispute letters. Once the credit bureau receives them, they have exactly 30 days to respond.
Of course, if there’s an item in question, there may be follow ups. But the whole process usually takes no more than 60 days. If you have lots of items to dispute, your credit repair service may decide to do them in batches. In this case, it might push the schedule out to 90 days.
And there’s no way to rush the process. You can’t pay a rush fee to a credit repair service, because they don’t control how fast the bureau responds. But you won’t need a credit repair service continually forever.
Q: Are there free credit repair services?
A: Not really. There is such a thing as free credit repair. You can go through the same process that a professional credit repair company would go through; you just do it yourself. But there’s little chance of finding a company that will make disputes on your behalf for free. Licensed attorneys are unlikely to perform credit repair services pro bono.
What you can find for free are template letters for writing disputes. Many free financial education providers offer sample dispute letters. These show you how to write disputes that have the greatest chance of success. A wrongly worded dispute can potentially lead to a rejection, meaning the item would stay on your credit report. We recommend at least referring to these templates if you’ve never gone through credit repair before.
Q: Are there online credit repair services?
A: Yes. Although most local state-licensed attorneys would have a brick-and-mortar office near you, you can find online credit repair services; these are usually national credit repair companies that serve customers all 50 states. Just make sure if the company is a national repair service provider that they have attorneys on staff that are licensed to work in the state you reside.
Q: Do credit repair services work?
A: Yes, although the success of these services depend on what’s contained in your credit report.
- If you have a clean, error-free credit report already with no negative items, then credit repair services can’t help you. There’s nothing to repair.
- By the same token, they can’t help you if you have negative information in your credit report that’s accurate. Credit repair can’t fix mistakes that actually occurred, like missed payments you really missed.
- But if you have one or more mistakes in your credit report, then credit repair can help you. The more errors you have to correct, the more you need professional help to get results.
Q: How can I find the best credit repair services?
A: If you’re looking for a reputable credit repair service, follow these four steps:
- Make sure they have an attorney licensed to work in your state
- Look at independent third-party review websites, consumer reports and rip-off reports to get a read on the company.
- Find an independent company (like Debt.com) that vets services for you to connect with an accredited provider.
- Avoid companies that make claims they can’t guarantee, like improving your credit score by 100 points guaranteed.
Q: How much do credit repair services cost?
A: The average cost of credit repair services varies based on the level of service that they provide. There’s usually a setup fee to get started with the service; it generally runs between $15 and $90. Then, many of credit repair services also include a monthly fee that can be anywhere from $30 to $100 per month. That fee basically covers the administration costs associated with making ongoing disputes. Credit repair companies charge a monthly fee because if you have a large number of disputes, your initial setup fee won’t cover their costs.
Again, keep in mind that most people only use a credit repair service for a few months. So, this won’t end up being a recurring cost in your budget that sticks around for years.
Ready to repair your credit now? Debt.com will connect you with an accredited credit repair service that you can trust!
Article last modified on May 11, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Credit Repair Services: How to Find Legitimate Help - AMP.