How Much Does Credit Repair Cost?

How Does Credit Repair Work?

Credit repair is the process of identifying potentially inaccurate information on your credit reports and asking the credit bureaus to correct or remove it. Credit repair companies do that work on your behalf for a fee, using the same dispute process you have the right to access at no cost.

A credit repair service typically starts by pulling your credit reports and going through them with you to identify entries that may be inaccurate or fraudulent. Then, it files disputes on your behalf with the credit reporting agencies—Experian, TransUnion and Equifax—and sometimes also with the company that furnished the information.

In turn, the credit bureaus and lenders investigate the dispute and either correct or remove the entry, or confirm that it's accurate and leave it in place. Some credit repair companies may also sell credit monitoring services, identity theft protection and other resources.

Myth Buster: Some services may suggest that they can remove any negative mark off your credit report, even if it's accurate. These offers are typically scams. Under federal law, only inaccurate, incomplete and unverifiable items may be removed from credit reports before they fall off naturally.

How Much Do Credit Repair Companies Charge?

Many credit repair companies work on a monthly subscription basis, with typical fees ranging from $75 to $150 depending on the services they offer. More expensive plans may come with additional tools, such as more robust credit monitoring and access to educational resources.

The law prevents credit repair companies from collecting fees until they have provided the services they promise, so their subscription fees typically cover work done in the month preceding the bill.

On top of that, services may charge a setup fee ranging from $50 to $200, which is said to cover the cost of obtaining your credit reports and preparing your disputes.

In other cases, a credit repair firm may charge you a per-item fee rather than a monthly subscription. For example, you may pay $25 to remove a hard inquiry, $50 per deletion for late payments or collection accounts and $100 for a bankruptcy.

Is It Worth Paying Someone to Fix Your Credit?

Credit repair companies cannot do anything you can't do yourself for free, with modest investments in time and patience. You have the right to file a credit report dispute online (usually the quickest), by phone or by mail.

The Consumer Financial Protection Bureau (CFPB) provides ready-made form letters that can help you expedite the process if you prefer to dispute by mail.

If you're inclined to hire a credit repair company in an effort to save time, keep in mind that no company can do all the legwork for you. For a credit repair company to do its work, you may need to provide it with receipts or other evidence that the credit report entries in question are inaccurate.

Ultimately, only you can decide whether the often steep fees credit repair companies charge are worth it to you. For many consumers, they generally aren't. In fact, you could put hundreds of dollars into a credit repair service with no guarantee of an outcome.

Credit Repair Red Flags to Watch For

Disreputable credit repair services operate outside the law, generally at your expense. Here are some warning signs of a credit repair scam to watch out for before you sign anything:

• Payment before any work: Federal law bars credit repair companies from taking your money before they've delivered what they promised. A setup fee billed after the company reviews your reports and opens your account is legal. But a request for payment at signup is a clear sign a company isn't following the rules.
• Impossible promises: No company can promise specific results, such as a credit score increase or a removal of a particular entry. In the end, the credit bureau that receives the dispute will decide what stays and what goes based on their investigations.
• No written contract: You're entitled to a contract listing the services, the total cost, the timeline and your right to cancel within three days. A company that won't put those terms in writing is breaking the law.
• Instructions to dispute accurate information: Some companies tell clients to challenge every negative item, including the correct ones. Accurate entries stay on your credit report either way, and lying to a credit bureau is fraud.
• Offers of a new credit identity: Some companies sell credit privacy numbers to use in place of your Social Security number. These are often stolen numbers, and using one on a credit application is a federal crime.

How to Fix Your Credit for Free

You can fix your credit at no cost, but it can take time, patience and discipline. Here's how.

1. Review Your Credit Reports

You can get free weekly access to copies of your credit reports from the three national credit bureaus at AnnualCreditReport.com. You can also get your free credit report with Experian directly. Study them carefully and note any information that you believe to be inaccurate.

Pay particular attention to recent inquiries, notations of late or missed payments and accounts listed in collections. If they're assigned to you inaccurately, their removal from your credit reports could bring quick improvement to your credit scores.

Inaccurate inquiries and accounts you don't recognize could also be a sign of credit fraud. In addition to disputing them with the credit bureaus, it may be wise to use the lender contact information found in your credit reports to follow up on potential criminal activity conducted in your name.

Credit report

2. Work to Correct Inaccurate Credit Report Entries

You have the right to dispute any credit report information you consider inaccurate, and the process is and always has been free of charge. Each credit bureau has its own processes for submitting disputes online, via the U.S. mail or by phone. The CFPB provides sample form letters that can expedite the process.

Note that you may need to provide evidence, such as a bank statement or canceled check, to show that a misreported credit report entry is inaccurate. If the credit bureau requires this information, it will notify you.

Tip: Each credit bureau keeps its own credit files and runs its own investigations. When the same error appears on more than one credit report, submit a separate dispute to every bureau that's reporting it.

3. Address Accurate Negative Entries in Your Credit Reports

If your credit reports include accurate listings of accounts past due or assigned to collection departments or agencies, those entries will remain on your credit reports for seven years from the date of the first missed payment that spawned them. Even so, you may be able to ease their negative effects by bringing the accounts current or paying the balances on any collection accounts.

The benefit of paying off a collection account may depend on the nature of the debt (medical versus nonmedical, for example), the amount of the debt and even which scoring system is used to generate your credit score.

4. Adopt Good Credit Habits Going Forward

Removing inaccurate negative information from your credit reports can improve your credit scores relatively quickly, but credit score improvement is typically a long game. Here are some ways to promote steady score improvement over time:

• Pay your bills on time every month.
• Avoid excessive balances on credit cards and other revolving credit accounts.
• Seek new credit only as you need it.
• Cultivate and responsibly manage a variety of credit accounts, including a mix of installment loans and revolving debt.

As you commit to good credit habits, your credit score should slowly improve over time.

How Long Does It Take to Repair Your Credit?

The U.S. Fair Credit Reporting Act requires credit bureaus to investigate disputes they receive, from you or a third-party credit repair company, within 30 days. That timeline stretches to 45 days if you supply additional documentation after the investigation is already underway. Once the investigation wraps up, the bureau must notify you of the result within five business days.

If you have accurate negative information on your credit reports, neither you nor any credit repair company can legally have it removed, but all negative entries eventually expire and disappear from your credit reports on their own. Most negative entries, including late payments, accounts turned over to collections and foreclosures or repossessions of financed property, expire after seven years.

An exception is Chapter 7 bankruptcy, which stays on your credit report for 10 years from the date when you file for protection with the bankruptcy court.

The Bottom Line

Credit repair companies can be costly and, because they don't do anything you can't do yourself with a little time and effort, they're probably not worth it for most consumers. The steps that move a credit score are the same whether you take them or pay someone else to take them for you.

If you choose to fix your credit yourself, you can track your progress by regularly checking your FICO^® Score^{☉ Θ} for free from Experian.