If your credit score is less than stellar, you may consider bringing on credit repair companies to help you fix the problem.
But the truth about most credit repair companies is not flattering. Many credit repair companies happily charge high fees and don’t offer the great “guaranteed” results they advertise.
Follow along to learn how credit repair companies work, and if you do decide credit repair assistance is right for you, we've provided the best credit repair companies to choose from.
What are credit repair companies?
Credit repair companies are a type of business that helps people with their credit, notably after a series of credit missteps that led to a low credit score.
If you are interested in credit repair, do be aware that there are many credit repair scams out there, and you should always do in-depth research before hiring a credit repair company to ensure they are legitimate.
Credit repair companies work with you and lenders to help improve your credit score. While credit repair companies may make it easier, you can certainly do anything a credit repair business does on your own without paying for help.
How do credit repair companies work?
Good credit repair companies use several strategies to fix and improve your credit. While you can do this yourself, they will take care of the heavy lifting for you and do all of the work… for a fee.
Here are some of the most common steps a credit repair agency will take to improve a credit score:
Review your credit for errors - Credit repair companies review your credit report from all three credit bureaus and look for negative errors that can be easily and quickly removed.
Dispute and fight to remove negative items - After removing errors, the credit repair company will look for other negative items that may be able to be removed through the dispute process. This is the bulk of what credit repair companies do, so they are often quite good at it.
What do credit repair companies charge?
There is a wide range of credit repair companies out there, and each has a unique pricing model. Of the most reputable companies, most charge around $60 per month to $100 per month for credit repair services with no contract requiring a specific duration or number of months.
Before you hand over your credit card number, think about what this may cost over just a few months. Depending on your credit history and your goals, a credit repair company may require several months, as well as hundreds of dollars in costs, to help fix your credit.
Now consider what your time is worth. If that $300 only saves you three or four hours of work, you would be better off doing it on your own in most cases. Seriously consider the value you get in return for the cost.
Beware: credit repair company scams
While there are some reputable credit repair companies out there, many are misleading or even go as far as to scam consumers. Things are so bad that the Consumer Financial Protection Bureau recently fined four companies $2 million for predatory practices.
Many credit repair companies are simply a scam. Before hiring, always look up reviews for the company you are considering on third party review websites. Compare pricing to the industry average, and look the company up at the Better Business Bureau (BBB) to see if the company has a history of complaints.
There are more bad credit repair companies out there than good ones, so do your homework if you do decide to hire a credit repair company for help.
Do-it-yourself credit repair
Did everything above scare you off from hiring a credit repair company? If it did, you are far from out-of-luck. You can fix up your credit on your own without paying anyone a cent.
It just takes following some tried and true principles and your credit score will inevitably rise.
First, work to pay off any outstanding credit card balances and collections. Getting revolving credit lines (like credit cards) paid off is the fastest way to improve a credit score if you normally carry a balance.
Next, set up automatic payments for any open credit account to make sure you don’t accidentally miss a payment. Late payments harm your credit for up to seven years, so make sure to always pay on time no matter what.
Third, review your credit reports, which you can get for free by law at annualcreditreport.com. Look for any errors and file a dispute with the credit bureau to remove any negative incorrect information.
Next, you can call up lenders with outstanding balances and negative information and ask if they would remove the negative items from your credit report. This is something credit repair companies do that individuals often skip for themselves.
Last, but certainly not least, wait. It takes patience to fix a credit score. No amount of money will fix a series of late payments overnight. If you can keep credit accounts open while avoiding opening and applying for too many new ones, you should see your credit score improve over time.
Best credit repair companies
If you would rather hire it out than do it yourself, save yourself from the scammers and choose a reputable credit repair business with a high rating from the BBB. Here are the best credit repair companies to pick from:
- Lexington Law: BBB Rating A-, $99.95 initial fee then $89.95 per month
- Sky Blue: BBB Rating A+, $59 initial fee then $59 per month
- The Credit People: BBB Rating A-, $19 for first 7-days then $69 per month
- CreditRepair.com: BBB Rating A+, $99.95 initial fee then $99.95 per month
Do you need credit repair?
If you made it this far, you may already be interested in hiring one of the best credit repair companies to help you out. But don’t feel pressured.
You can always fix your credit on your own if you are willing to take the time and stay dedicated to the task.
Your credit is too important to ignore, but that doesn’t mean you have to spend big to fix your credit.
Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.