How to choose a credit repair company
Key takeaways
- Credit repair companies correct report errors to improve your score, but they cannot remove legitimate debts or defaults.
- Consider hiring a credit repair service if you face multiple errors, have heavy debt or lack time to conduct repairs on your own.
- Check fees, transparency and reputation before you commit, and compare companies to avoid extra costs and poor service.
Credit repair companies can be invaluable when you face issues with your credit. They offer specialized services to help dispute errors on your credit report and improve your financial position.
Many credit repair companies exist. IBIS World research suggests that there were 43,810 credit repair services in the U.S. in 2023. However, not all credit repair companies are created equal. To choose the right option, you need to think carefully. Here, you’ll learn how to decide when to work with a credit repair company and what to look for.
What credit repair companies do
Credit repair is the process of fixing or improving your credit score by addressing inaccurate or outdated information on your credit report. It usually involves identifying and disputing errors with credit bureaus.
While you can do this on your own, many people turn to credit repair companies to manage the process more efficiently.
The goal of credit repair is to clean up your credit report so you can raise your credit score. A higher score improves your chance to get loans with better terms, qualify for credit cards or secure other types of financing.
When to consider a credit repair company
Before you turn to a credit repair company, you need to know when you need one.
Here are some situations where a credit repair service can be useful:
- You have multiple errors on your credit report.
- Your debt is overwhelming.
- You lack of time or know-how to repair your credit on your own.
If you have a significant number of inaccuracies or debts past the statute of limitations, a professional specializing in credit disputes can save you time.
Some credit repair companies also offer debt management. These companies can help consolidate debts and set up manageable repayment plans, including paying off debts in collections.
The Federal Trade Commission (FTC) warns that credit repair companies cannot legally guarantee removing accurate negative information from your credit history. Any company that makes such promises is running a scam.
If your credit issues stem from late payments, defaults or unpaid debt, these won’t disappear simply because you hire a credit repair company. Instead, you may want to study debt-free living and how to get there.
Key considerations when you choose a credit repair company
The right company can save you from unnecessary fees, wasted time and further financial damage. There are several main factors to consider when you compare credit repair companies.
1. Transparency and services offered
A reputable credit repair company will clearly explain its services, including what it can and can’t do for you. Avoid companies that guarantee specific outcomes, like a certain number of points added to your credit score or removing accurate negative marks from your report.
Look for a company that offers a clear and straightforward breakdown of their services. Services you might see include:
- Any additional services or credit builder offers
- A personalized credit improvement plan
- Credit monitoring
- Credit report analysis
- Disputes and challenges to all three credit bureaus
- ID theft protection
Consider what you need and whether or not the credit repair company offers it. It can be helpful to know how to determine financial needs vs. wants.
2. Cost and fees
Another key aspect of choosing the right company for your situation is understanding how much it will cost.
Credit repair companies typically charge in one of two ways:
- A monthly fee
- Pay-per-deletion
With a monthly fee, you pay a set amount each month. With pay-per-deletion, you only pay for items that the company successfully removes from your report.
In addition to their ongoing fee, many credit repair companies charge a start-up fee or “first work fee” for the initial review of your credit report.
Get a full breakdown of the costs before you sign any contracts. Avoid companies that require excessive upfront payments or make vague promises about fees.
3. Money-back guarantees
Some credit repair companies offer a money-back guarantee. This can signal that a company is reputable and stands behind its work. However, a shady company might just as quickly offer a guarantee without intending to deliver on its promise.
When researching companies, pay close attention to the terms of any money-back guarantees. That way, you’ll know when you may be entitled to a refund and how to claim it.
For example, you may need to inform the company within a certain time frame that you are unsatisfied and would like a refund. Some companies offer a full refund, some extend your service time for free and others will return a portion of your funds under limited circumstances.
To be sure a credit repair service is right for you, learn how to protect yourself from debt relief and credit scams.
4. Accreditation and compliance
A reliable credit repair company will comply with regulations like the Credit Repair Organizations Act (CROA). CROA is a national law that prohibits credit repair companies from lying about what they can do and requires them to provide a written contract with detailed services and fees.
If a credit repair company violates the CROA:
- Report it to the FTC at ReportFraud.ftc.gov.
- Contact your state’s attorney general office, which may have consumer protection divisions that can investigate further.
It’s also helpful to check whether the company is accredited by organizations like the National Association of Credit Services Organizations. Accreditation with either organization ensures the company follows industry standards and offers some customer protection services.
5. Customer reviews and track record
Before hiring a credit repair company, research its reputation. Check reviews online through a variety of sources.
Watch out for:
- Complaints about hidden fees
- Exclusively positive reviews (five-star reviews across the board are rare, especially in finance)
- Fraud allegations
- Numerous negative reviews
Just because a company claims it has been in business for years doesn’t mean it’s true. Verify how long it has operated by checking its registration with the state, which is often listed in the terms or website footer. A quick search for “complaints” or “lawsuits” can also reveal red flags.
Make sure you’re aware of what consumer credit protections you have.
How to find and compare credit repair companies
Once you’ve decided that a credit repair company is the right move for you, the next step is to find and compare your options. Cross-check multiple companies to see their services and costs and determine which plan best fits your needs.
1. Shortlist multiple companies
Don’t settle for the first company you come across. Instead, create a list of at least three credit repair companies that may meet your needs based on:
- Pricing
- Services
- Timeframe to address errors
2. Take advantage of free consultations
Many credit repair companies offer free initial consultations, which allows you to get a feel for their process. You can ask specific questions to assess how they’ll handle your case. Additionally, you can use this consultation to gauge their level of customer service and professionalism.
Again, don’t settle on the first company you speak with. If you can, consult with each company on your shortlist before you sign up for any credit repair program.
3. Check for additional resources
Some credit repair companies offer educational resources, financial planning tools or access to online customer portals. Something like this might help you manage your finances better during the credit repair process.
Each reputable credit repair company has a unique value proposition. Some do it for less money while others offer unique services such as unlimited disputes or identity theft help.
4. Choose the company that aligns with your needs
When choosing the credit repair service that fits your needs, compare what each offers.
For instance, if you’re looking for affordability, companies like Sky Blue Credit offer a 90-day money-back guarantee and competitive pricing at $79 per month. If you need comprehensive services, Lexington Law might be a better fit with its credit report analysis and legal support — but its higher fees reflect those differences.
The bottom line
Choosing the right credit repair company requires careful consideration to decide whether you truly need professional help. If you do, focus on companies with transparent services, fair pricing and a solid reputation.
Be wary of promises that sound too good to be true — no company can erase accurate negative information from your credit report. With a little research, you can find the right credit repair service to improve your credit.
