What Do Credit Repair Companies Do? 

What Do Credit Repair Companies Do

You may ask, “Exactly what do credit repair companies do?” after you see their ads promising to fix your credit. It’s a fair question because, on first impression, it may seem that they have some secret sauce to improve your bad credit. 

These companies speak of “opportunities to raise your scores” or embarking on a “credit repair journey.” Separating the steak from the sizzle, it’s clear that credit repair companies can’t guarantee you a higher credit score.

Nonetheless, the best credit repair companies work hard to remove errors and unverifiable negative items from your credit reports. And for many clients, the payoff is indeed a higher credit score. Considering the typically moderate cost, that’s not a bad deal. 

This article will explain how credit repair companies operate and review our top three. 

Credit Repair Companies File Disputes With the Credit Bureaus

Much of the consumer finance industry relies on the three major credit bureaus (Equifax, Experian, and TransUnion) for the information necessary to support lending decisions. Lenders and creditors use credit reports and credit scores to decide whether to grant applicants a loan or new credit card and, if so, how much to charge. 

The process starts with vast data collection. Creditors and lenders report their customers’ account histories to one or more credit bureaus each month. The data includes payment history, balances, the type of accounts a borrower has, and when they were opened or closed, among other things.

A credit bureau (or credit reporting agency) collects the information, processes it, files it away, and then sells it to lenders, credit card issuers, and other interested parties. In doing so, they must conform to the rules set in the Fair Credit Reporting Act

The two chief products are consumer credit reports and credit scores. The credit reports contain a consumer’s lending history, while credit scores encapsulate that history into a single number.

FICO is the leading credit scoring system. Its scores range from 300 (worst credit) to 850 (perfect credit). FICO scores rely on five factors — payment history, amounts owed, age of credit accounts, new credit, and credit mix — that feed its proprietary algorithm. Consumer FICO scores can be the most important factor governing a borrower’s access to credit.

The credit bureaus buy licenses for the FICO system (among others), apply their credit databases to it, and generate consumer credit scores. 

Your credit score depends on your credit history, and as the saying goes, garbage in, garbage out. In other words, invalid data can damage your credit score. The job of credit repair companies is to dispute any questionable data on your credit reports. 

What a Credit Repair Company Does
Photo courtesy of Lexington Law

When a credit repair organization wins a dispute on your behalf, the credit reporting agency must fix or delete the error and recalculate your credit score. The bureaus have 30 days to resolve these disputes. 

Credit repair companies look for all sorts of errors and unverifiable data, from accounts you didn’t open and inquiries you didn’t authorize to payments mistakenly labeled as late.

The companies work with you to uncover, document, and dispute these errors. The credit repair process can boost your credit score and alert you to identity theft or other types of fraud. 

Credit repair companies typically charge a monthly fee of $50 to $150 for their services. Subscriptions usually run from four to six months, but you can cancel anytime. As a subscriber, you’ll receive periodic alerts about the company’s credit repair work, including reports of dispute activity and updates to your credit score.

Top Recommended Credit Repair Company

Our recurrent choice for the best credit repair company, Lexington Law, employs an expert staff that knows how to eliminate mistakes from credit reports. While results may vary, 89% of past Lexington Law clients who saw their poor credit scores improve have experienced an average increase of 40 points.

  • Free consultation: 1-855-200-2394
  • Most results of any credit repair law firm
  • Clients saw over 9 million negative items removed from their credit reports in 2016
  • More than 500,000 credit repair clients helped since 2004
  • Cancel anytime
  • Click here for sign-up, terms, and details.
★★★★★

4.9

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 2004 $99.95 10/10

The company offers three credit repair service levels at varying price points that allow customers to select the scope of work they want completed. Whichever level you choose, Lexington Law vigorously pursues questionable credit report items. 

More Credit Repair Companies to Consider

BadCredit.org considers the following credit repair companies to be legitimate and trustworthy. All adhere to the disclosure requirements of the Credit Repair Organizations Act. These companies offer credit repair services beyond disputing errors, including credit monitoring, debt validation, and ID theft insurance. 

  • Free online consultation
  • Helped with over 7.5 million removals on members’ behalf since 2012
  • Free access to your credit report summary
  • Three-step plan for checking, challenging and changing your credit report
  • Online tools to help clients track results
  • Click here for sign-up, terms, and details.
★★★★★

4.5

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 2012 $99 9.5/10

CreditRepair.com has challenged and disputed more than 26 million credit report items since 1997, with more than 8.2 million removals since 2012. This credit repair business claims that it increases its clients’ credit scores by an average of 40 points within four months. 

There’s no charge for the initial consultation, and you can select from three service levels to fit your budget. CreditRepair.com offers a mobile app, personal online dashboard, score tracker, text and email alerts, and TransUnion credit monitoring.

  • Free consultation: 1-888-805-4944
  • In business since 1989
  • Quick pace: Sky Blue disputes 15 items monthly, track your progress 24/7
  • 90-day 100% money-back guarantee
  • Low $79 cost to get started, cancel or pause membership anytime
  • Click here for sign-up, terms, and details.
   
★★★★★

4.5

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 1989 $79 9.5/10

Sky Blue Credit Repair® has roots going back to 1989. It originated a 90-day unconditional guarantee that remains unsurpassed within the credit repair industry. This credit repair agency has an A+ rating from the Better Business Bureau.

In contrast to its competitors, Sky Blue offers only one service level that includes many features for which other companies charge extra. Clients receive a set number of monthly challenges. Subscriptions also provide cease and desist letters, debt validation, credit counseling, credit scoring analysis, and debt settlement consultations.

  • Free credit consultation
  • Unlimited disputes of credit report items
  • Costs $89 for initial work, then $79-$109 monthly to continue
  • Cancel anytime
  • Professional advisor assigned to each case
  • Essentials Plus also sends validation, goodwill, and recommendation letters to creditors
  • Click here for sign-up form, terms, and details.
 
★★★★

4.4

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
A+ 2004 $79+ 8.5/10

Ovation Credit Repair by LendingTree offers two credit repair service levels. Both plans dispute unfair, inaccurate, and unverifiable credit report items, and require an initial startup fee and a monthly subscription. The costlier service level provides an unlimited number of disputes. The Better Business Bureau gives the company an A+ rating.

  • Credit Firm has helped consumers improve their credit scores for more than 20 years
  • No hidden fees — just $49.99/month
  • Credit Firm uses every legal tool and procedure allowable by law to remove as much derogatory information as possible from your credit reports to increase your credit scores
  • 97% of our clients refer us to friends and family
  • Click here for sign-up, terms, and details.
★★★★

4.4

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 1997 $49.99 8.5/10

CreditFirm.net is the most affordable option on this list and has a high approval rating from its clients. It’s been in business for a long time and has extensive experience helping clients remove derogatory items from their credit reports.

  • Free credit evaluation: 1-877-637-2673
  • 90-day money-back guarantee
  • Three packages to choose from — Credit Polish, Credit Remodel, Clean Slate
  • Personal online account page provides updates, analysis, and progress reports
  • Click here for sign-up form, terms, and details.
★★★★

3.8

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
A+ 2004 $79.99+ 7.0/10

Credit Saint™ lets you choose among three service levels that include a 90-day money-back guarantee and an initial setup fee of between $99 to $195. The basic Credit Polish service provides a set number of challenges per cycle. You also get creditor interventions, credit score analysis, credit counseling, and score tracking.

Credit Versio

Credit Versio provides software to consumers who want to repair their credit on their own. It is a low-cost alternative that allows subscribers to import their credit reports and create a set number of dispute letters each month. You can purchase a more expensive package with a higher monthly dispute limit.

Pyramid Credit Repair

Pyramid Credit Repair has more than a decade of experience disputing items on its clients’ credit reports. The monthly fee is $119 for individuals and $198 for couples. Services include a free initial credit consultation, a money-back guarantee, and around-the-clock phone support.

The Credit People

The Credit People has removed almost 1.5 million credit issues for its clients over the past 15 years. The standard credit repair package costs $79/month, or you can buy a six-month subscription for $419, which comes out to $69/month. Both packages include unlimited credit issue challenges, score analysis, and monthly credit score updates.

Can I Fix My Credit on My Own?

Under the Fair Credit Reporting Act, you can dispute your credit reports independently if you have the time and expertise. While credit restoration isn’t trivial, most folks can perform DIY credit repair for little or no cost. 

One benefit of fixing your own credit is that you won’t expose yourself to a credit repair scam. 

You can begin the process by getting free copies of your three credit reports from annualcreditreport.com. Although the three reports have unique formats, they share the same types of information:

  • Personal information: Credit reports identify your name, address, date of birth, and Social Security Number. They may also include your job history, current income, and more data.
  • Accounts in good standing: These are open or closed accounts containing no negative information. Data includes account type, original loan amount or credit limit, current balance and status, and payment history.
  • Derogatory information: These are adverse credit items, including late payments, debts associated with a bankruptcy, charge-offs accounts, collections, repossessions, foreclosures, settlements, and bankruptcies. These items remain on your credit reports for seven to 10 years.
  • Credit inquiries: Your reports track hard and soft credit inquiries for 24 months. The hard inquiries are visible to any report recipients, but only you can see the soft ones. Hard credit pulls affect your credit score for up to 12 months.

If you find errors in your credit reports, you can file disputes with the credit bureaus online or via mail. 

Each dispute should involve a single item on one credit report. You must explain the problem, request the removal or correction of the erroneous information, and include documentation to support your challenge. 

The Consumer Financial Protection Bureau offers instructions and template letters to guide you through the credit restoration process. You can also dispute errors with the companies that provided the incorrect information. 

If you prevail, the credit bureau will fix the report, recalculate your credit score, and send the corrected information to recent report recipients. Even if the credit bureau verifies the item is correct, you can append a statement to your credit report explaining your point of view. 

You can also appeal a negative outcome, but you should only do so if you can provide additional information and documents that support your claim. And you should not send frivolous disputes to the credit bureaus just to see what sticks. 

Can Credit Repair Companies Hurt Your Credit?

No, credit repair companies cannot hurt your credit. They can only attempt to remove harmful items from your reports that are weighing your scores down. If successful, your credit scores will improve, not get worse.

Is It Worth Paying Someone to Fix Your Credit?

It may be worth paying for credit repair if you don’t have the time or inclination to do it yourself. 

Good credit repair companies have honed their procedures for optimal results. They understand how, why, and when to file disputes. In other words, they may be more effective than the average DIYer. 

With costs as high as $150 per month, credit repair companies aren’t cheap. But many come with a money-back guarantee, and you can cancel your subscription anytime. 

One of the most affordable credit repair companies is CreditFirm.net, with services as low as $50 per month and no initial work fees or other upfront costs.

  • Credit Firm has helped consumers improve their credit scores for more than 20 years
  • No hidden fees — just $49.99/month
  • Credit Firm uses every legal tool and procedure allowable by law to remove as much derogatory information as possible from your credit reports to increase your credit scores
  • 97% of our clients refer us to friends and family
  • Click here for sign-up, terms, and details.
★★★★

4.4

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 1997 $49.99 8.5/10

You should also consider the services credit repair companies offer beyond filing disputes. All credit repair companies mentioned above offer several additional services, even at the cheapest service levels. 

Avoid Scams By Selecting a Legitimate Credit Repair Company

This article answers those who ask, “What Do Credit Repair Companies Do?” In the best circumstances, these companies can remove inaccurate and unverifiable information from your credit reports to help you achieve a higher credit score. 

But even the best credit repair agency cannot say it removes accurate information, lest it run afoul of the Credit Repair Organizations Act.

If you’re interested in subscribing to a credit repair package, vet the organization first. While many legitimate credit repair companies exist, it’s unfortunately true that a few stinkers are looking to rip you off. A new credit repair scam appears every few months, so don’t let down your guard.

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