How to compare credit repair companies

Any type of credit repair you choose can be helpful by identifying and fixing inaccuracies in your credit report. You can always repair your credit score on your own, but it requires time and dedication. In exchange for a fee, there are credit repair companies that can handle the process of contacting creditors on your behalf. Carefully weigh the time commitment against the potential cost to determine the better choice between a DIY approach and a credit repair company.

How to compare credit repair companies

When researching credit repair companies, consider the timeline, fees and overall process to potentially avoid credit repair scams or costly mistakes. Doing so also helps you select the best service for your situation.

Process and timeline

Research the credit repair company’s process to know what to expect. Ensure you understand how long it may take to see a difference in your credit score.

Typically, credit repair companies offer a free consultation to determine your potential timeline and help you decide if credit repair is the right approach. A bad credit score could mean a far longer timeline. You’ll likely also have to do more work on improving your money management habits.

If you only have a few items in your credit report to address, it might take significantly less time to work through the program. However, if this is the case, you may also be able to easily work through the items on your own without paying a fee.

Packages and services

Basic packages sometimes don’t include filing disputes with all three credit bureaus, or the number of disputes per month may be limited. Premium packages may provide more comprehensive dispute services that include multiple or unlimited credit disputes each month across all three main credit bureaus. They may also provide tools like credit score monitoring, identity theft protection and more in-depth customer service.

You can also explore a lower-cost alternative, such as a credit-building product or repairing your credit on your own. Evaluate the services offered thoroughly — items like credit score monitoring may already be available through your bank.

Prices

Even some of the best credit repair services charge a monthly subscription fee. Since credit repair is something you can do on your own for free, it’s important to determine whether you can afford the fee and if the services provided will be worth the cost.

If you decide to move forward, expect a monthly fee of $50 to $150. However, fees vary by credit repair company and the level of service provided.

Cancellation policy

Credit repair can take three to six months. After that, you will likely not need your subscription anymore. Research whether there are penalties for canceling your subscription and how quickly you can suspend it once you achieve your goal.

Keep in mind that you’re not obligated to move forward with credit repair services if you reconsider within three business days of signing up — depending on the state you live in, you may have longer. Instead, you can request a cancellation in writing and avoid any fees associated with the services.

Money-back guarantee

Credit repair companies can’t guarantee results upfront. The success of any potential repairs will be dependent on whether there are actual inaccuracies in your report that can be fixed. Ask if the company will refund any charges if you don’t see any results within a specified period. 

It’s equally important to know that credit repair companies are legally prohibited from collecting payment for services upfront. If you encounter this issue, move on to a more reputable option.

Reputation

The credit repair industry is full of scams, so be sure to vet a company’s track record before signing up for any services or sharing sensitive information. To find the best credit repair company, check the company’s name on the CFPB’s Consumer Complaint Database and see if there are any cases opened against it by the FTC. 

In addition, look at the company’s reviews on the Better Business Bureau’s (BBB) website and on Trustpilot. In most instances, there will be a disgruntled customer or two even if the services provided are up to par, but if there are multiple negative reviews with consistent themes, you may want to explore other options.

Keep an eye out for any company that tries to charge you before completing any work or recommends you enter false information on credit or loan applications.

When should you use a credit repair service?

Working with a credit repair company can be costly and may not be the best choice for everyone, so it’s a good idea to shop around and compare credit repair companies against other options.

• If you don’t have the time to do it yourself: If independently disputing items on your credit report with the credit bureaus is not something you have the time or patience to do, hiring a reputable credit repair company can be helpful.
• If you can afford the cost: The fees charged by credit repair companies can sometimes be steep, especially compared to a no-cost DIY approach. But if you find a company charging a reasonable rate or your credit report needs a significant amount of work, it may be a good idea.
• If your credit report needs significant work: If there are many items on your credit report that need to be addressed, it may be easier to work with a credit repair company. However, if there are just a few items, you can likely tackle it yourself without the expense associated with a repair company’s services.

Alternatives to credit repair companies

If you’d prefer not to hire a company to do the legwork for you, consider these credit repair alternatives:

• DIY credit repair: You can handle the entire process on your own and avoid the fees associated with hiring a credit repair company. It will take a little more time and effort on your part, but it will save you money.
• Focus on your payment history: Pay all your bills on time and bring any past-due accounts current, as payment history is the largest component of the credit-scoring calculation, regardless of the scoring model used.
• Meet with a credit counselor: You can connect with a professional who assesses your situation and creates a plan of action to improve your credit profile and overall financial health.
• Credit-builder loan: In some cases, credit-builder products may be a good choice. You can likely get a credit-builder loan at your local bank or credit union.
• Consolidate your debt: Roll all your debts into a loan to simplify the repayment process and lower your credit utilization ratio, which is another large chunk of your credit score. Just be sure to shop around and get the best debt consolidation loan available to you at your current score.

Bottom line

Consider the pros and cons of credit repair before committing. The process can cost you money or require additional commitments, depending on your chosen approach. Factor in your free time, disposable income and other financial goals when weighing your options.

If you choose to have a company do the work for you, research its credit repair packages and reputation within the space before signing up for any services. This will help you avoid unpleasant surprises and make the most of your time and money. You may also find that a credit repair alternative is more suitable for your situation.

Once your credit score is in better shape, you can apply for funding again. Just make sure to shop around for the best personal loan rates to maximize the impact and minimize the cost.