How To Hire A Credit Repair Company

In order to rent an apartment, you need good credit. Want to get financing on a car purchase or get a home mortgage at a low interest rate? Good credit is a must-have for either of those, too. Other benefits of having a good credit score include obtaining insurance at a lower premium cost, getting access to low-interest credit cards with financial perks, even getting a waiver on a security deposit when you sign up for a new utilities account. Unfortunately, your credit can be damaged fairly quickly with just a few missteps on your part, such as becoming delinquent on credit account payments. If those missteps become habitual problems, or if you file bankruptcy, your credit can take a nosedive. But other issues that are not in your control, such as fraud on the part of creditors, clerical  errors and irresponsible creditor reporting can also take a toll on your credit. Which is where a credit repair company can be of assistance. While a credit repair agency generally can’t help with legitimate reports, or get you out of trouble if you have been neglectful in your credit payments, a credit repair company can help with the following:

  • Finding inaccurate information on your reports
  • Discovering that you’re the victim of identity theft
  • Finding items reported on your credit report outside of the normal time period
  • Seeing collections reported that are past the statute of limitations
  • Dealing with poor credit due to mistakes you made in the past
  • Believing that items are being purposely reported wrong by any organization

Some credit repair companies may also provide education and guidance to help you make better financial decisions to improve credit in the future. If you have a credit score that you feel does not accurately reflect your payment behavior or history, or you have been a victim of identity theft, or you simply need assistance in planning how to improve your credit on your own, it may be time to enlist the help of a credit repair professional. Here’s how to do so with a better understanding of what to expect, and what to look out for.

  1. Take advantage of the credit repair company’s free evaluation.
  2. Repairing your credit is a major financial step, so ask the right questions up front.
  3. Understand the difference between a credit dispute and an audit.
  4. Ask about the credit repair company’s fee structure, and how much they charge.
  5. Be alert to potential credit repair scams.
  6. Don’t ask for a guarantee.

Take advantage of the credit repair company’s free evaluation.

Most legitimate credit repair companies actually help you understand whether they can be of service, and they do so through a free evaluation process. During the evaluation, the credit repair company may review your credit score and reports with one or all three major credit bureaus: Experian, Equifax and TransUnion. With that information, the credit repair company may present a list of potentially negative items that could be disputed, or other actions it can take to help you make positive headway on your credit. At this time, most credit repair companies also provide a recommendation about which services might be right for you.

Repairing your credit is a major financial step, so ask the right questions up front.

You do pay for credit repair services, so you want to ensure you hire the right company. Credit repair does take time, and you don’t want to get months down the road and realize the company you’re working with isn’t the right fit for you.

Here are some questions to consider asking before you commit to a credit repair company.

  1. What services does the company offer?
  2. Does the company meet all state licensing and operation requirements? Can you demonstrate proof?
  3. Who provides credit review and dispute services at your company, and what qualifications do they have?
  4. Are your staff members certified by the National Association of Credit Services Organizations (NASCO), or the Credit Consultants Association (CCA)?
  5. How aggressively does the company dispute items on my credit report?
  6. Will the company follow up to argue the case for items that aren’t removed?
  7. How can I follow the actions on my account? Is there an online portal where I can see updates in real time?
  8. What type of customer service options are available? Will you communicate with me by phone, text or email?
  9. Is there any type of item the company won’t work to dispute?
  10. What other financial management or education tools does the company provide to help you rebuild credit?

Understand the difference between a credit dispute and an audit.

A credit dispute occurs when an individual sends a letter stating they don’t feel an item is accurate—or when a credit repair agency does so on their behalf. The letter is sent to the credit bureau, then the bureau legally must investigate the claim and respond within 30 days. The bureau decides whether the dispute has merit and if the item in question should be altered or removed.

An audit by a consumer protection attorney is a bit more aggressive. The attorney requests proof of the negative item from the creditor. If the creditor can’t provide documentation supporting the item, the attorney demands that the creditor remove the item from the report. Audits can take more time than dispute letters and may involve experienced staff reviewing documentation and looking for inconsistencies. Some credit repair companies provide attorney audit services, but not all do.

Ask about the credit repair company’s fee structure, and how much they charge.

Most credit repair companies charge clients one of two ways: a monthly subscription service, or a pay-for-performance structure. Here’s what these payment models mean for you:

Subscription Service

This arrangement usually lasts from three to six months (if it goes longer than that, this may be an indication of a credit issue that requires attorney intervention). Generally you can expect costs for credit repair to range from $60 and $180 per month, depending on the level of service you’re looking for, with most companies charging right around $100 per month. Along with these costs, there may be an initial subscription setup fee to create your account, review your situation and initiate the dispute process. After that, you will be charged monthly for the preceding month’s services, until your all disputes have been exhausted and/or your issues have been resolved.

Pay For Performance (or Pay Per Delete)

In the PPD fee model, you only pay the credit repair agency when they demonstrate a resolution to a credit problem (such as removing an inaccurate reporting of late payment). While this arrangement may seem preferable to a monthly service fee, repair agencies who use it will often make up the difference by charging duplicate fees for having a report or issue deleted from multiple credit bureau reports. These duplicate fees can add up over time, and end up costing you significantly more than you might pay with a subscription-service credit repair firm.

Be alert to potential credit repair scams.

High-quality, professional credit repair can be a valuable service. It can help you overcome credit challenges while also moving forward with your own goals and obligations. While there are many reputable credit repair companies, there are also bad apples that run poorly organized services or even operate scams.

Here are some red flags that might indicate you should avoid a service.

  • The company makes a guarantee, such as a promise that an item will be removed or that your credit score will go up (see below for more on this). Credit repair companies don’t have this kind of power, and they legally can’t make this kind of guarantee.
  • The company has a large number of bad reviews.
  • It has unresolved customer complaints with the Better Business Bureau.
  • You find a lot of issues related to the company listed in the Consumer Complaint Database of the Consumer Financial Protection Bureau.
ExpertipExperTip
Asking for up-front payment for services is illegal under the Federal Trade Commission's Credit Repair Organizations Act. But that doesn't mean you won't pay anything to get the ball rolling with a credit repair agency. Many legitimate companies ask for a subscription or set-up fee, but these are usually modest, and allowed under CROA. If a company asks for hundreds of dollars in exchange for wiping something off your credit report, it's a bad sign, and should be reported.

Don’t ask for a guarantee.

No legitimate credit repair company offers a guarantee because doing so is prohibited under the Credit Repair Organizations Act. It’s also not something that can be provided realistically. Ultimately, the credit bureaus decide what they remove or change, and a credit repair company can only dispute information and argue for it being corrected. However, the bureaus are legally responsible for providing accurate credit information. It’s in their best interest to investigate and respond to legitimate disputes. So, if you have a good case and a high-quality credit repair agency, you have a good chance at positive results. As you pay for credit repair services, though, remember that it can take time to see those results. It’s also critically important to be prepared that some information might remain stubbornly on your report, and you should always have a plan B for improving your credit in the future.

Ready to speak to a credit repair professional? Here is our list of the best credit repair companies near you.