How Does Credit Repair Work?

How Does Credit Repair Work?
Kate Robinson BeckwithJune 19, 2019
Key Takeaways:
  • Credit repair can help you remove damaging errors on your credit report.
  • Credit repair services cannot legally remove accurate information.
  • You can do credit repair yourself, or pay a reputable service to do it for you.

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Whether you’re looking to buy a home, get a loan, or do anything else that requires a credit check, you may already know the importance of having a good credit score. And if your credit is less than stellar, you may be searching for a way to improve your score before applying.

Many companies claim they can repair your credit. But how does credit repair work, how do you navigate the choice of whether to use one, and how do you choose a company? Here are some tips for exploring your credit repair options.

What does a credit repair company do?

Credit repair involves either working with a company to fix or address negative hits on your credit score or doing it on your own. If you choose to work with a company, they will access your credit report, review it for derogatory marks, analyze the causes of those marks, and set a plan for remedying them. This could include:

Disputing credit report errors and removing incorrect and derogatory information on your credit report could improve your credit score, but it comes at a price. In return for disputing errors on your behalf, the credit repair company typically charges fees ranging from $50 to $150 per month. So, how does credit repair work if you’re paying that much per month for this service? It’s something you’ll have to decide as you weigh your options.

Reviewing and analyzing your credit reports could take a matter of hours, but drafting dispute letters and submitting them to credit bureaus could take multiple days or weeks. Once a credit bureau receives the dispute, they typically have 30 days to investigate and verify the information. The credit bureau will then contact the company supplying the information and request that they inspect it for inaccuracies.

The bureau is required to send you the results of this investigation within five days of its completion. If the credit bureau deems your dispute “frivolous,” though, it can choose not to look into it and must inform you of that decision within five business days.

Pros and cons of hiring a credit repair service

How does credit repair work for your particular needs? It depends. There are benefits and drawbacks to getting help from a credit repair company, such as:


  • They do all the legwork for you, saving you time and, potentially, stress.

  • They have the experience, so they may have tactics you wouldn’t think of on your own or have negotiation opportunities you may not.

  • Their resources make the process much more efficient. It could take you months to address issues on your own, but a credit repair company could do it in weeks.


  • Credit repair services always come at a price, and it varies as to how much the fees are and how they are charged.

  • Results aren’t guaranteed. You may find that you’ve paid a lot only to discover the dings on your credit can only be repaired by time and rebuilding efforts on your part.

  • The possibility of getting scammed is real. It is critical to do your due diligence in researching the company you choose.

Is using a credit repair service right for you?

It might make sense for you to use a credit repair service if you:

  • Have a poor score because of errors or false information on your credit report

  • Don’t have the time to investigate and dispute errors yourself

  • Did your research to found the right company

  • Can afford the fees

  • Have a major purchase coming up that would benefit from you having an improved credit score

Hiring a credit repair company would NOT be a wise decision, though, if you:

Credit repair companies offer services that could be beneficial for some people, but as with any important financial decision, it’s vital that you do your research and understand what you’re getting into before you hire one.

Plus, it may be smarter to work to rebuild your score over time through best practices day-to-day. Understanding the way credit works is an important part of financial literacy, and doing the work of repairing your credit on your own could go a long way towards ensuring a healthy financial life for years to come.

How to choose a credit repair service

If a credit repair company is the right choice for your situation, it is important to do your research. Here are a few tips to help you find a legitimate credit repair company:

Compare your options

You should research what different companies charge for their services, as well as the terms and conditions of their contracts. Some companies charge monthly, anywhere from $50 to $150, whereas others charge per deletion, or a one-time flat fee. Different pay structures will make sense for different people, and it’s up to you to decide which is right for you.

Check online reviews

Before you sign up for credit repair, make sure to read reviews of the companies on sites like ConsumerAffairs or TrustPilot. You can also ask friends and family if they have experience with a credit repair service they can recommend to you.

Companies are required to give you a contract in writing, and since terms and conditions vary so much between companies, be sure to read everything (including the fine print) before signing anything. Are the terms of the contract clear and consistent? If a company is not upfront about the cost, it should raise red flag for you.

Watch out for false promises

Does a company make promises that sound too good to be true? If they guarantee they can improve your credit, it could be a sign they are a scam. And some negative things on your credit report, like derogatory marks that are accurate, can only be removed over time. You should avoid any company claiming it can eliminate them all for you.

As you can see, being able to answer the question, “How does credit repair work?” only gets you so far. While it may make sense in theory, it might not be the best match for your situation or long-term needs. Meanwhile, not all companies have your best interests at heart. Make sure you do your homework before choosing this path.

Repair your credit and plan for a bright future today

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Achieve financial control. How much debt do you have?

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