How to Choose a Credit Repair Company

While you can legally repair your own credit, the process can be challenging and time-consuming. Because of this, many people turn to experienced credit repair companies to help remove damaging errors from their credit reports. To choose a credible company, read customer satisfaction reviews, check costs, and get details about what the company promises to accomplish.

Key Takeaways

• A credit repair company can help you remove credit report errors when you can’t do it on your own.
• Credit repair companies offer multiple subscription levels and various services, including dispute letter assistance.
• Price, services, and reputation are key factors to consider when you choose a credit repair company.
• Credit repair companies can’t guarantee specific results.

How to Fix Your Credit

Credit repair involves identifying and addressing negative information on your credit report so that lenders look at you more favorably when deciding whether to approve you for loans. With better credit, you are more likely to get a lender’s best terms.

To choose a credit repair company, review multiple companies. Evaluate their services, pricing, and reputation to narrow your options. When you’ve chosen a company, you can enroll directly or request a consultation to discuss your options.

When Is It a Good Idea to Use a Credit Repair Company?

If you have errors that are affecting your credit score, you may consider hiring one of the best credit repair companies to help improve your credit. You can repair your credit on your own, but getting help from a professional may provide a better outcome depending on your circumstances.

Here are some scenarios when you may want to consider a credit repair company:

• You have errors on your credit report but don’t know how to fix them. Credit repair won’t be a good fit if everything in your credit report is accurate, even if it’s negative.
• You have a busy schedule and can’t dedicate time to working on your credit. Challenging credit report errors and following up with credit bureaus can be time-consuming. Relying on a credit repair company to write letters and send disputes on your behalf can save you time on your credit journey.
• You’re planning a big purchase, like a house or car. An experienced credit repair company can create a credit repair strategy around your specific goals. Credit repair doesn’t work in all situations. If you have an accurate bankruptcy or foreclosure on your credit report, you will have a four- to seven-year waiting period before you can get a mortgage.
• You can afford to stay enrolled long enough to see results. Consider your budget and upcoming expenses for the next several months. The timeframe to see results from a credit repair company can vary depending on your credit report and the company you work with.

Choosing a Credit Repair Company

When you choose a credit repair company, you’ll want to take several steps to ensure you find the best match for you. Here are some of the main steps: 

• Understand the services offered: Credit repair companies may provide a variety of services, including error disputes, credit score tracking, and identity theft insurance.
• Review pricing: Many credit repair companies offer multiple subscription levels with different prices. Learn whether you’ll be charged an upfront fee for the initial work done on your file.
• Ask about the process and timeline: Understand the steps the credit repair company will take to improve your credit. While credit repair companies can’t guarantee results, you can inquire about the average timeframe for previous clients.
• Learn about money-back guarantees: Ask about a credit repair company’s refund policy and whether you’ll receive a refund if you don’t get results in a certain amount of time.
• Research each company’s reputation: Online reviews will show how other customers rate the company. Check with the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) to learn whether the company has any pending or previous legal action.

Warning

Avoid credit repair companies that promise specific results or charge upfront fees before they have done any work for you.

Applying for a Credit Repair Company

Some credit repair companies may require you to call and schedule a consultation before you can apply. Whether you apply online or by phone, the application process will have similar steps.

1. Complete the application: Provide your personal information, like your name, address, and date of birth.
2. Select a service level: Choose a service type based on your needs and affordability. Many credit repair companies offer three subscription levels, each with different services.
3. Sign the legal agreement: Accept the terms. Make sure you save a copy of the agreement for your records.
4. Provide your payment information: You’ll need to provide your payment information for the initial fee and ongoing monthly payments.

Important

Some credit repair companies charge an “initial” or “first work” fee. This one-time fee covers setting up your account, reviewing your credit report, and creating an action plan.

Best Credit Repair Companies

Alternatives to Credit Repair Companies

Along with hiring a credit repair company, you have other options for improving your credit. To make the best choice, consider a few alternatives before choosing whether to hire a credit repair company.

• Do-it-yourself: Review your credit report and address errors directly with the credit bureaus. Provide copies of proof of your disputes to help remove credit report errors.
• Credit counseling: A professional credit counselor can help you get current on past-due accounts and maintain a timely payment history. However, credit counselors won’t file disputes on your behalf.
• Debt consolidation: Consolidating your debt makes it easier to stay on top of your payments by combining multiple balances with a single loan. Debt consolidation can lower your interest rate, saving you on total interest costs and helping you get out of debt faster. Balances for consolidated debts will show on your credit report, but consolidating debts won’t get rid of negative information.

Frequently Asked Questions (FAQs)

What Does a Credit Repair Company Do?

Credit repair companies help consumers improve their credit scores by working to remove harmful, inaccurate information from their credit reports. The company will complete an initial review to determine which items can be disputed. Next, it will send dispute letters and follow up with the credit bureaus on your behalf. You’ll receive updates on your credit repair progress as your credit report is updated.

Can a Credit Repair Company Raise Your Credit Score?

Working with a credit repair company can potentially raise your credit score. Still, your exact results depend on your individual credit report and whether items are removed from your credit report.

Removing harmful errors can improve your credit score, but credit repair companies can only provide limited results. You may still need to pay down high balances and continue making timely payments on other accounts to reach your credit score goal.

How Long Does It Take to Fix Your Credit With a Credit Repair Company?

The timeline for fixing your credit with a credit repair company varies depending on the company, the number of errors on your credit report, and the responsiveness of the credit bureaus. Every situation is unique, and some cases may take longer than others. Even the best credit repair companies can’t guarantee a timeframe for fixing your credit or guarantee any change in your credit.

How Can You Fix Your Credit Yourself?

You can fix your credit yourself by reviewing your credit report and addressing errors directly with the credit bureaus or the company reporting inaccurate information. In addition to removing errors from your credit history, opening new credit accounts and maintaining a positive credit history will help raise your credit score.

The Bottom Line

You’re in a financially vulnerable place if you’re trying to repair your credit report. Instead of randomly choosing a credit repair company, take some time to research options—you might even decide you can take steps yourself. If you choose to hire a company, read reviews, learn about what services they offer, and ask how much you’ll pay.

Read the original article on Investopedia.