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

Key Takeaways

  • Legitimate credit repair companies can help you remove inaccurate information from your credit report, which may be damaging your credit score.
  • However, they can’t do anything for you that you couldn’t do on your own—and for free.
  • Beware of scam credit repair companies that make promises they can’t fulfill and often demand money upfront.

Understanding Credit Repair

Consumers’ credit scores are based on a number of factors, including whether they pay their bills on a timely basis. Missing payments can hurt their credit score and, in turn, make it more difficult for them to obtain other credit, such as a mortgage or car loan, in the future. A poor credit score can also mean having to pay higher insurance rates and even make it more difficult to get a new job or rent an apartment.

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

Credit repair is the process of trying to correct those problems. If the information is accurate, there is little that anyone—even a professional credit repair company—can do to change it. In most cases, it will remain on the credit report for up to seven years, after which it will disappear.

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

Bear in mind that there is nothing that a credit repair company can do for you that you couldn’t do on your own. But you might consider hiring one if you feel overwhelmed by the process or simply don’t want to devote your time to it.

How Credit Repair Works

The first step in repairing your credit is to obtain your credit reports and check them for accuracy. By law, you’re entitled to one free credit report every 12 months from each of the three major national credit bureaus—Equifax, Experian, and TransUnion. The official website for obtaining your free credit reports is

Note that the information in your credit reports can differ from bureau to bureau. That’s 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) review them for errors. If they report late payments, for example, check your records to see if that’s true. Check, too, for any accounts that you don’t recognize. That could be a sign that someone else has opened an account in your name.

In case you discover errors, the Federal Trade Commission (FTC) outlines a dispute process you can follow.

The FTC first suggests writing to the credit bureau (or bureaus) in question. Explain which information you’re disputing and attach photocopies of any documents that support your case. You can also contact individual creditors directly to contest information that they supplied to the credit bureau.

The law requires that the credit bureau investigate your claim within 30 days unless it considers it frivolous. The bureau must also provide your letter and supporting documents to the creditor that supplied the disputed information. The creditor is required to investigate your claim and report back to the credit bureau.

When the investigation is finished, the credit bureau must report the results to you in writing. If the bureau decides in your favor, the original creditor must notify all of the credit bureaus it supplied the erroneous information so they can correct their files. If the decision goes against you, you still have the right to provide a written explanation that will be added to your credit file.

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

Hiring a Credit Repair Company

Credit repair companies can guide you through the process outlined above, and many also offer additional services, such as credit monitoring. What’s that likely to cost?

Investopedia recently analyzed a number of such companies to compile its list of the Six Best Credit Repair Companies of 2020. The companies had a variety of pricing models.

As an example, Ovation Credit Services, Investopedia’s Best Overall pick, offered two plans, which ranged in price from $79 to $109 per month. Both plans also charged a “first work” fee of $89.

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


If a credit repair company says it can remove any negative information in your credit report, consider that a sign you’re dealing with a scam.

How to Avoid Credit Repair Scams

While legitimate credit repair companies can do what they promise, the field is rife with scam artists. The Consumer Financial Protection Bureau provides some warning signs to watch out for, such as if the company:

  • Promises to remove all negative information from your credit report. Remember, no one can get accurate information deleted from your credit report, so if a company claims to be able to, that’s a major red flag. 
  • Suggests you dispute even accurate information. Disputing information you know to be correct is tantamount to fraud.
  • Pressures you to pay upfront. A legitimate credit repair company won’t ask for money before it has done anything. In fact, that’s illegal under the federal Credit Repair Organizations Act.

Note that if you do sign up with a credit repair company, you have the right to cancel free of charge within three days.

The Bottom Line

Legitimate credit repair companies can see to it that inaccurate information is removed from your credit reports so that it doesn’t harm your credit score. However, they can’t do anything for you that you couldn’t do for yourself if you’re willing to put in the time and effort.