Do Credit Repair Companies Really Work?



Credit repair companies offer to help consumers improve their credit rating in exchange for a fee. Some are legitimate businesses, while others are little more than scams. Here’s what a credit repair company can and can’t do for you.

Key points to remember

  • Legitimate credit repair companies can help you remove inaccurate information from your credit report, which can hurt your credit score.
  • However, there is nothing they can do for you that you cannot do on your own and for free.
  • Beware of fraudulent credit repair companies that make promises they can’t keep and often ask for money up front.

Understanding Credit Repair

Consumers’ credit scores are based on a number of factors, including whether they pay their bills on time. Missed payments can hurt their credit rating and, in turn, make it harder for them to get other credit, like a mortgage or car loan, in the future. A bad credit rating can also mean having to pay higher insurance premiums and even make it more difficult to get a new job or rent an apartment.

Credit scores are calculated based on information contained in the consumer’s credit report, and sometimes that information is inaccurate. This can happen when creditors report wrong information to the credit bureau or if an identity thief takes out credit on behalf of the consumer.

Credit repair is the process of trying to fix these problems. If the information is correct, there is not much that anyone, even a professional credit repair company, can do to change it. In most cases, it will stay on the credit report for up to seven years, after which time it will be gone.

However, if any of the information in a credit report is inaccurate, the consumer has the right to dispute it. They can do it themselves or pay someone else to help them.

Keep in mind that there is nothing a credit repair company can do for you that you cannot do on your own. But you might consider hiring one if you’re feeling overwhelmed by the process or just don’t want to spend your time on it.

How does credit repair work

The first step in repairing your credit is getting your credit reports and checking them for accuracy. By law, you are entitled to a free credit report every 12 months from each of the three major national credit bureaus: Equifax, Experian, and TransUnion. The official site for getting your free credit reports is

Note that the information in your credit reports may differ from office to office. This is because some of your creditors may report to one of them but not to the others.

Once you have your credit reports in hand (or on screen), examine them for errors. If they report late payments, for example, check your records to see if it’s true. Also check any accounts you don’t recognize. It could be a sign that someone else has opened an account in your name.

If you discover any errors, the Federal Trade Commission (FTC) describes a litigation process that you can follow.

The FTC suggests writing to the credit bureau (or bureaus) in question first. Explain the information you are disputing and attach photocopies of all documents to support your case. You can also contact individual creditors directly to dispute the information they have provided to the credit bureau.

The law requires the credit bureau to investigate your claim within 30 days, unless it considers it frivolous. The office should also provide your letter and supporting documents to the creditor who provided the disputed information. The creditor is required to investigate your claim and report to the credit bureau.

When the investigation is complete, the credit bureau must notify you of the results in writing. If the bureau decides in your favor, the original creditor should notify all credit bureaus to which they provided the wrong information so that they can correct their files. If the decision is against you, you always have the right to provide a written explanation which will be added to your credit report.

Much of this process can be done online, and the three major credit bureaus provide relevant instructions and forms on their websites.

Hire a credit repair company

Credit repair companies can walk you through the process outlined above, and many also offer additional services, such as credit monitoring. What is this likely to cost?

Investopedia recently analyzed a number of these companies to come up with its list of the top six credit repair companies of 2020. The companies had various pricing models.

For example, Ovation Credit Services, Investopedia’s best overall choice, offered two packages, which ranged in price from $ 79 to $ 109 per month. Both plans also charged a “first job” fee of $ 89.

Other credit repair companies charge between $ 19 and $ 149 per month, depending on the bundle of services the consumer signs up for.


If a credit repair company says they can remove any negative information from your credit report, consider this a sign that you are dealing with a scam.

How to Avoid Credit Repair Scams

While legitimate credit repair companies can do what they promise, the field is full of scammers. The Consumer Financial Protection Bureau provides some warning signs to watch out for, such as if the business:

  • Promises to remove all negative information from your credit report. Remember, no one can have specific information removed from your credit report, so if a business claims to be able to do so, that’s a major red flag.
  • Suggest you dispute even exact information. To dispute information which you know to be correct is tantamount to fraud.
  • Requires you to pay up front. A legitimate credit repair company will not ask for money until they have done anything. In fact, it is illegal under the Federal Credit Repair Agencies Act.

Note that if you register with a credit repair company, you have the right to cancel for free within three days.

The bottom line

Legitimate credit repair companies can ensure that inaccurate information is removed from your credit reports so that it doesn’t hurt your credit score. However, there is nothing they can do for you that you cannot do on your own if you are willing to put in the time and effort.


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