What is credit repair?

You probably already know just how important your credit score is and how this three-digit manifestation of your credit health can affect your life. Without a solid credit score, you may struggle to get your own apartment, buy a home, or finance a car, for example — and that’s just the beginning.

If your credit has been damaged due to late payments, debts in collections, or neglect, credit repair may be exactly what you need. You can work to improve your credit yourself or you can hire a firm to help. A good credit repair company can work as your advocate, educating you about your credit score and how it’s determined. They also work to improve your credit on your behalf, usually by negotiating with creditors and credit bureaus to remove negative marks, resolve issues and help you repair your credit — once and for all.

Unfortunately, there are numerous credit repair scams to be aware of. Some credit repair companies will ask for money upfront, while others will ask you to take unethical steps, such as disputing accurate information on your credit report. Any time a company promises you a “new credit identity” or asks you to give false information, run the other way.

Fortunately, credit repair companies are governed by the Credit Repair Organizations Act (CROA). This law requires credit repair companies to take certain steps, including informing you of your legal rights, giving you three full days to cancel your contract and letting you know the full costs of their services upfront. The law also gives you options if a credit repair company doesn’t live up to its promises, including the ability to sue them in federal court, the ability to seek punitive damages, and the right to join a class action lawsuit against the company.

If you’re ready to repair your credit, a reputable credit repair agency can help. Keep reading to learn more about how these companies work and what to expect.

What services do credit repair companies provide?

While credit repair companies don’t do anything you can’t do yourself, they do play an important role for people who feel overwhelmed by trying to fix their credit themselves. There are legitimate reasons consumers may turn to a credit repair company, including getting fraudulent accounts removed from their credit report, amending mismerged credit accounts that belong to someone else and misreported bankruptcies.

Legitimate credit repair providers assist consumers by reviewing the consumer’s credit reports, identifying information that is adverse to the consumer, interviewing the consumer and obtaining documents from the consumer to determine whether any of the derogatory information is false.

From there, they typically prepare a letter to the credit bureaus disputing the errors. The dispute letter should identify the errors with specificity, briefly explain why the disputed information is false or misleading and state what the credit report should say instead.

Some of the steps credit repair companies can take on your behalf include:

  • Getting a copy of your credit report from the three credit reporting agencies: Experian, Equifax, and TransUnion
  • Reviewing your credit report to identify problems and the best course of action to fix them
  • Helping you utilize federal consumer protection laws to protect you and your credit from unfair debt collection practices
  • Analyzing your credit score and educating you on how to improve it
  • Negotiating with your creditors on your behalf
  • Disputing inaccurate information on your credit report and working to have it removed
  • Working to fix incorrect credit limits that can inflate or skew credit utilization and adversely your credit score

What credit repair companies can't do

While having a third-party company handle all your credit issues for you may sound ideal, it’s important to keep your expectations in check. Credit repair companies can absolutely help you improve your credit score over time, but they do have limitations.

Credit repair companies can't do anything you can't do yourself.

While credit repair agencies will work with your creditors and the three credit bureaus to improve your credit and have negative information removed, you can also take all of these steps yourself without paying for credit repair. You can also call your lenders and negotiate with them yourself. You do not need a credit repair firm for that. In fact, many lenders may not even allow a third party to negotiate on the customer’s behalf.

Credit repair companies can’t remove accurate information from your credit report.

While credit repair companies may work hard to get your credit report cleared of any inaccurate information, they cannot get accurate negative information removed from your report. Because credit repair organizations are overseen by the Credit Repair Organizations Act (CROA), they also cannot promise to have information removed from your reports.

Credit repair companies may not offer budgeting or money management advice.

While credit repair agencies aim to get you out of debt and repair your credit, they don’t offer the same services as credit counseling agencies. Credit counseling agencies offer a more holistic approach to solving your money and credit problems, focusing most of their efforts on helping you make a budget, manage your money better and reduce spending.

On the flip side, however, credit counseling services don’t take the same steps to boost your credit score or fix negative marks on your credit report as credit repair agencies do. Before you choose one service over the other, it helps to educate yourself on both options.

Does credit repair work for everyone?

Credit repair can help consumers boost their credit scores and move on from credit problems from their past. In that respect, credit repair can work for anyone if you give it enough time. For the process to work, however, you need to work in collaboration with your credit repair agency to make needed changes, such as paying down debt and paying your bills on time.

You can also get a free copy of your credit report from all three agencies online for free from AnnualCreditReport.com instead of relying on a credit repair company to pull your credit reports for you. Last but not least, you can take steps to improve your credit on your own, including paying down delinquent debts, making all of your payments on time and lowering your utilization by paying down the amounts you owe.

Frequently asked questions

The length of time it will take to repair your credit depends on a wide range of factors, including your current credit score, the severity of your credit issues and the amount of debt you have to pay off. If you want to get a general idea of how long it will take for credit repair to work, your best bet is to speak with a knowledgeable credit repair agency to see what steps they need to take and a general timeline for their services.


While credit repair agencies may not be able to tell you exactly how long it will take to repair your score, their experience in this field may put them in a position to give you a general idea.

Since the Credit Repair Organizations Act oversees credit repair agencies and sets rules to govern what they can and can’t do, you have rights when it comes to credit repair. According to the CROA, credit repair companies must explain your legal rights in a written contract along with details of the services they’ll perform. They must also inform you of your three-day right to cancel without charge, and let you know approximately how long their services will take. Last but not least, credit repair agencies must inform you of the total cost of their services in writing.


If a credit repair agency doesn’t offer this information, you should steer clear of them altogether.

While credit repair companies can take care of the bulk of your credit repair for you, they can’t do anything you can’t do yourself. The Federal Trade Commission (FTC) offers a multi-step process to repair your credit on your own. Not only do they suggest ordering a copy of your credit report for free at AnnualCreditReport.com, but they also suggest disputing errors on your reports directly with the credit reporting agencies.


Other steps you can take to improve your credit include paying all your bills on time (perhaps setting up payment reminders to expedite this) and lowering the total amount of debt you have. Paying off any late or delinquent debts will also help boost your score.

Checking your credit score doesn’t hurt it. You can get your credit score on LendingTree within a matter of minutes. You can also get a free copy of your full credit report from the three credit reporting agencies — Experian, Equifax and TransUnion — once per year on AnnualCreditReport.com.

Accounts paid in good standing tend to stay on your credit report for 10 years. Negative information on your report tends to stay there for seven years. However, revolving debts and installment debts with a previously late payment history usually stay on your credit report for up to 10 years, although the late payment history can be removed after seven years.

The FTC notes that it’s important to report fraudulent or shady credit repair agencies to the appropriate authorities. They suggest making a report with your state attorney general or filing a complaint with the FTC. You can also call the FTC help line at 1-877-FTC-HELP.

If you’re struggling with debt and the effects of poor credit, working with a credit counseling agency can also help. These agencies, which are normally nonprofit, work with you to manage your debts and stick to a monthly budget. They also discuss your entire financial situation with you in an effort to pinpoint the personal struggles you have with money along with potential solutions.

Your credit score is calculated using several factors, the most important of which include your payment history and the amounts of money you owe. In fact, your payment history makes up 35 percent of your FICO score and your utilization (amount of debt you owe compared to your credit limits) makes up another 30 percent. Other factors impacting your credit score include the length of your credit history, the amount of new credit you have and the mix of different types of credit you carry.

Some of the most common signs of a credit repair scam include:


  • asking you to pay for their services up front,
  • telling you not to contact the credit reporting agencies yourself,
  • advising you to dispute accurate information on your credit report,
  • asking you to give false information
  • failing to explain your legal rights up front.